Inherited IRA Rules: The 10-Year Rule, Beneficiary Types, and What Account Owners Should Plan For

A beneficiary designation form you signed years ago can quietly cost your heirs a six-figure tax bill. If a non-spouse inherits a $600,000 traditional IRA, the inherited IRA rules generally require the account to be emptied within ten years, and every dollar withdrawn is taxed as ordinary income in the beneficiary's own peak earning years. A single missed annual withdrawal can add a 25% excise tax on top.

The rules changed with the SECURE Act, SECURE 2.0, and final Treasury regulations (T.D. 10001) that apply starting in 2025. This guide is for owners planning ahead and beneficiaries who have just inherited an account. Use it to prepare better questions for your own tax, legal, and financial professionals.

What Are the Inherited IRA Rules?

The inherited IRA rules determine how fast a beneficiary must withdraw money from an IRA after the owner dies, and how those withdrawals are taxed. For most non-spouse beneficiaries of owners who died after 2019, the rule is a 10-year limit: the entire balance must be withdrawn by December 31 of the year containing the 10th anniversary of the owner's death, as described in IRS Publication 590-B.

Three things decide your situation: who the beneficiary is, whether the owner died before or on/after the required beginning date (RBD, when RMDs had to start), and whether the account is traditional or Roth. An RMD is the minimum amount the tax code requires you to withdraw from a retirement account each year. Traditional IRA withdrawals count as ordinary income. The IRS states that traditional IRA distributions you include in income are taxed as ordinary income, which is why the timing of withdrawals matters as much as the deadline.

Inherited IRA Rules by Beneficiary Type

The SECURE Act created three tiers of beneficiaries. The table below summarizes the general treatment; the details follow in the sections after it.

The SECURE Act 10-Year Rule Explained

The 10-year rule applies to a designated beneficiary who is not an eligible designated beneficiary. If an adult child inherits a traditional IRA from a parent who died in 2026, the account must be fully distributed by December 31, 2036. The deadline is the end of the tenth calendar year after the year of death, not ten years to the day.

Suppose you inherit $600,000 from a parent who died before their RBD. Nothing requires you to take money out in years one through nine, but the account must reach zero by the deadline. If you wait and withdraw everything in year ten, the full $600,000 lands in a single tax year. Spreading it evenly would mean $60,000 a year added to your existing income. Growth, tax brackets, and state taxes change the math, so beneficiaries commonly work with a CPA.

Annual RMDs During the 10 Years: What the Final Regulations Changed

If the owner died on or after their required beginning date, the beneficiary generally must take annual RMDs in years one through nine and empty the account by the end of year ten. The final regulations, T.D. 10001, confirmed this interpretation and rejected comments asking Treasury to eliminate the annual requirement. You can read the regulation in the Federal Register.

If the owner died before their RBD, there is generally no annual RMD requirement during the 10 years for a non-eligible beneficiary; the balance simply has to be gone by the deadline. The distinction makes the owner's age and RMD status at death an important planning fact.

Waivers for 2021 Through 2024

Because the rule was unclear for several years, the IRS issued relief in Notices 2022-53, 2023-54, and 2024-35. Under that relief, certain beneficiaries who skipped specified annual RMDs in 2021 through 2024 were not assessed the excise tax. In Notice 2024-35 the relief covers designated beneficiaries of owners who died in 2020 through 2023 on or after the RBD. The relief did not move the 10-year deadline; it only waived enforcement of the interim annual withdrawals. You can read the notice on IRS.gov.

Inherited IRA Rules 2025 and Beyond

The final regulations apply to distribution calendar years beginning on or after January 1, 2025. That means the good-faith transition period is over, and beneficiaries subject to annual RMDs are expected to take them. If you inherited an account in 2020 through 2023 from an owner who had reached their RBD, confirm with your tax professional what was required for 2025 and what applies in 2026. Beneficiaries are also responsible for the owner's RMD in the year of death.

Inherited IRA Rules for Spouses

A surviving spouse who inherits a traditional IRA generally has two main paths.

Option 1: Treat the IRA as Your Own

You can designate yourself as the account owner or roll the assets into your own IRA. Your own RMD schedule then applies, using the Uniform Lifetime Table.

Option 2: Remain the Beneficiary

You can instead treat yourself as the beneficiary. If the owner died before their RBD, you generally use your own life expectancy to calculate withdrawals.

SECURE 2.0 also added an election that lets certain surviving spouses be treated as though the owner were still alive for RMD timing purposes. Treasury reserved the detailed rules for future proposed rulemaking, so confirm the current status before relying on it. For more on how spouses can use retirement accounts together, see our guide to spousal IRA strategies.

Inherited IRA Rules for Non-Spouse Beneficiaries

Non-spouse beneficiaries have fewer choices. According to the IRS, you cannot treat an inherited IRA as your own, which means you cannot make contributions to it or roll amounts into or out of it. A typical path is a direct transfer from the deceased owner's account into a properly titled inherited IRA. Taking a check payable to yourself can trigger tax on the whole amount and cannot be undone with a standard IRA rollover.

Eligible Designated Beneficiaries: The Exceptions

An eligible designated beneficiary is defined as the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, or any other individual who is not more than 10 years younger than the owner. EDB status is determined as of the owner's date of death, per the final regulations.

These beneficiaries may generally take withdrawals over their life expectancy instead of the 10-year window. Two details matter. For a minor child of the owner, the 10-year rule begins once the child reaches the age of majority. For other EDBs, the 10-year rule applies to what remains after the EDB dies.

Roth vs. Traditional Inherited Accounts

The account type changes the tax character of every withdrawal. Traditional IRA distributions are ordinary income. Roth IRAs are different in a useful way: the IRS notes that withdrawals from Roth IRAs are not required until after the owner's death. Beneficiaries, however, still follow the beneficiary rules. A non-spouse Roth beneficiary generally still faces the 10-year deadline, but without annual RMDs, and qualified withdrawals are generally income-tax free.

Suppose you hold $400,000 in a traditional IRA and $400,000 in a Roth IRA, and your daughter inherits both. She has ten years to empty each. The traditional account creates taxable income with each withdrawal; the Roth account gives her more flexibility on timing. See our overview of tax-free investing with Roth accounts.

SECURE 2.0 RMD Age and the Penalty for Missed Withdrawals

SECURE 2.0 raised the age at which owners must start RMDs. The age is 73 for owners who reach it between 2023 and 2032, and 75 for those who attain age 74 after December 31, 2032. That affects beneficiaries too, because whether the owner died before or after the RBD drives the annual-RMD question.

The penalty for missing a required withdrawal is a 25% excise tax on the amount not distributed. The IRS says it drops to 10% if the shortfall is corrected within two years. A waiver may be requested on Form 5329 for reasonable error. See the IRS RMD FAQs for details.

Trusts as Beneficiaries

Some owners name a trust to protect a young, disabled, or financially inexperienced heir. A trust can receive the more favorable "see-through" treatment if it meets specific requirements, so the IRS looks through the trust to its individual beneficiaries. The final regulations keep the two main designs: a conduit trust, which passes every withdrawal straight to the primary beneficiary, and an accumulation trust, which can retain withdrawals and potentially benefit others later.

This is attorney territory. Have a licensed estate-planning attorney draft the trust language and coordinate it with your account custodian.

Beneficiary Designation Planning for Account Owners

For account owners, the practical work is simple and often neglected. A short checklist:

1. Name primary and contingent beneficiaries on every account. The designation form generally controls over your will.

2. Review after life events. Marriage, divorce, births, and deaths can leave outdated names on file.

3. Coordinate with your entities. If your business owns or interacts with account assets, your structure matters; see our guide to estate planning for business owners.

Self-Directed IRAs: Special Inheritance Considerations

If your IRA holds real estate, private notes, or other non-traditional assets, inheritance has extra moving parts. The 10-year clock and any annual RMDs apply the same way, but the assets may be illiquid. A beneficiary who must take a withdrawal may need to sell a property or assign a note to raise cash, and the account's holdings usually need a current valuation to calculate RMDs.

Consider a $500,000 account that holds a rental property worth $450,000 and $50,000 in cash. If an annual RMD applies and the cash is gone, the beneficiary may need to sell, borrow within the plan's rules, or distribute part of the asset in kind. Planning liquidity ahead helps. Learn more about how these assets work in our guides to self-directed IRA real estate and alternative investments in a self-directed IRA.

Unified Wealth Systems is an administrator, not a custodian or law firm, so your custodian and professionals handle valuation and legal title questions. To compare account structures, see self-directed vs. regular IRAs.

Frequently Asked Questions

What is the 10-year rule for inherited IRAs?

The 10-year rule requires most non-spouse beneficiaries to withdraw the entire inherited IRA by December 31 of the year containing the tenth anniversary of the owner's death. It applies to deaths after 2019. Depending on whether the owner had reached their required beginning date, annual withdrawals may also be required before the deadline.

Do I have to take annual withdrawals from an inherited IRA?

Possibly. If the owner died on or after their required beginning date and you are subject to the 10-year rule, the final regulations generally require annual RMDs in years one through nine and a full payout by year ten. If the owner died before that date, annual withdrawals generally are not required for a non-eligible beneficiary. Confirm your facts with a tax professional.

Can a spouse treat an inherited IRA as their own?

Yes. A surviving spouse can generally treat the IRA as their own, which means their own RMD schedule applies, or remain a beneficiary and use the beneficiary rules. The better choice depends on your age, your income needs, and the owner's age at death, so review it with your tax advisor before moving any money.

What are the inherited IRA rules for non-spouse beneficiaries?

Non-spouse beneficiaries generally cannot treat the IRA as their own or roll money into it. Most must use the 10-year rule, while eligible designated beneficiaries may stretch withdrawals over life expectancy. Distributions from a traditional IRA are taxed as ordinary income, so timing withdrawals across several years often matters.

What happens if I miss a required withdrawal?

You may owe a 25% excise tax on the amount you should have withdrawn. The IRS says the rate falls to 10% if you correct the shortfall within two years, and you can request a waiver by filing Form 5329 and showing reasonable error. Special relief applied to certain missed RMDs for 2021 through 2024, but not in later years.

Does a self-directed IRA change the inheritance rules?

The distribution deadlines are the same as for any IRA, but the practical issues differ. Real estate and private notes can be hard to sell or value, which complicates cash needs for RMDs. Plan liquidity and valuation with your custodian, attorney, and CPA, and review our self-directed IRA rules for the basics.

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Related Reading: Estate Planning for Business Owners | Spousal IRA Strategies | Self-Directed IRA: The Complete Guide