Inherited IRA Rules After SECURE 2.0: What Beneficiaries Must Do Now

The inherited IRA rules changed dramatically under the original SECURE Act of 2019 and were further refined by SECURE 2.0, signed into law in December 2022. According to the IRS’s SECURE 2.0 guidance, most non-spouse beneficiaries now face a strict 10-year rule that eliminates the old “stretch IRA” strategy used by millions of families.

These changes affect anyone who has recently inherited — or expects to inherit — a traditional IRA, Roth IRA, SEP-IRA, or SIMPLE IRA. Getting the rules wrong can trigger significant penalties, making it critical to understand exactly what is required right now.

What Is the 10-Year Rule for Inherited IRAs?

The 10-year rule requires most non-spouse beneficiaries to withdraw the entire balance of an inherited IRA by December 31 of the tenth year following the account owner’s death. There are no required annual withdrawals for some beneficiaries, but the full balance must be depleted by the deadline.

Before the SECURE Act of 2019, beneficiaries could “stretch” distributions over their own life expectancy — sometimes decades. That strategy was eliminated for most heirs. Now, only Eligible Designated Beneficiaries (EDBs) can still use the stretch method. EDBs include surviving spouses, minor children of the deceased, disabled individuals, chronically ill individuals, and beneficiaries no more than 10 years younger than the original owner.

The IRS clarified in proposed regulations released in 2022 that if the original IRA owner had already started Required Minimum Distributions (RMDs), non-spouse beneficiaries must also take annual RMDs during the 10-year window — not just drain the account by year ten. This interpretation surprised many tax professionals and remains one of the most misunderstood aspects of current inherited IRA rules.

Which Beneficiaries Are Affected by These Rules?

Whether the 10-year rule applies depends entirely on your classification as a beneficiary. The IRS divides heirs into three categories, each with different obligations.

Eligible Designated Beneficiaries (EDBs)

Eligible Designated Beneficiaries retain the right to stretch distributions over their life expectancy. Surviving spouses have the most flexibility — they can roll the inherited IRA into their own IRA and defer distributions until their own RMD age. Minor children of the deceased can use the stretch method, but only until they reach the age of majority (generally 18 or 21 depending on state law), at which point the 10-year rule kicks in.

Non-Eligible Designated Beneficiaries (Non-EDBs)

Non-Eligible Designated Beneficiaries — which includes most adult children, siblings, and friends — are subject to the 10-year rule in full. According to Fidelity’s inherited IRA guidance, this group represents the majority of people who inherit retirement accounts today.

Non-Designated Beneficiaries

Estates, charities, and certain trusts named as beneficiaries fall into this category. They face a 5-year rule if the owner died before their required beginning date, or must follow the remaining life expectancy schedule if the owner had already started RMDs.

What Are the RMD Rules Within the 10-Year Window?

Whether annual RMDs are required during the 10-year period depends on whether the original IRA owner had reached their Required Beginning Date (RBD) before death. This is one of the most consequential distinctions in current inherited IRA rules.

Under SECURE 2.0, the RMD starting age was pushed to 73 for those born between 1951 and 1959, and to 75 for those born in 1960 or later, as confirmed by IRS RMD FAQs. If the original owner died before reaching this age and had not yet started distributions, non-EDB heirs simply need to empty the account within 10 years — with no annual RMD requirement.

If the original owner had already begun RMDs, the non-EDB beneficiary must take annual distributions based on their own life expectancy (using the IRS Single Life Expectancy Table) during years one through nine, and then withdraw whatever remains in year ten. Missing these annual distributions triggers a 25% excise tax on the shortfall — reduced to 10% if corrected within two years, per SECURE 2.0 provisions.

If you are managing multiple retirement accounts alongside an inherited IRA, understanding how RMDs interact with your own retirement planning is essential. Our guide on Required Minimum Distributions: What Retirees Keep Getting Wrong covers common errors in detail.

What Did SECURE 2.0 Specifically Change for Inherited IRAs?

SECURE 2.0, passed as part of the Consolidated Appropriations Act of 2023, made several targeted adjustments to inherited IRA rules rather than a wholesale overhaul. Its most important changes affect penalty relief, RMD ages, and Roth accounts.

First, SECURE 2.0 waived RMD penalties for inherited IRA distributions missed in 2021, 2022, 2023, and 2024 for non-EDB beneficiaries — recognizing widespread confusion following the 2022 proposed regulations. The IRS issued Notice 2024-35 confirming the waiver for 2024, giving beneficiaries additional time to get into compliance.

Second, SECURE 2.0 clarified that Roth IRAs inherited from a deceased owner are now subject to the 10-year rule as well — even though Roth accounts have no RMD requirement during the original owner’s lifetime. Non-EDB heirs of Roth IRAs must still empty the account within 10 years but owe no annual distributions, and qualified withdrawals remain tax-free. This makes Roth inherited IRAs significantly more flexible than traditional inherited IRAs.

Third, the law raised the RMD starting age, which affects when a deceased owner is considered to have reached their Required Beginning Date. For those planning their own estates, understanding these rules alongside what changed in Required Minimum Distributions in 2026 is critical for minimizing heirs’ tax burdens.

What Tax Strategies Should Inherited IRA Beneficiaries Use?

Smart distribution planning can significantly reduce the tax impact of an inherited IRA. The core strategy is spreading withdrawals across all 10 years to avoid lumping large taxable amounts into high-income years.

Beneficiaries should compare their marginal tax rate in each year of the 10-year window. Taking larger distributions in low-income years — career transitions, early retirement, years with large deductions — can reduce the effective tax rate on those dollars considerably. According to Charles Schwab’s inherited IRA resources, mapping out projected income for the full 10-year window before taking a single distribution is the single most impactful step a beneficiary can take.

For beneficiaries who also have their own retirement accounts to manage, coordinating inherited IRA withdrawals with contributions to a Health Savings Account as a retirement tool or other tax-advantaged vehicles can help offset taxable income. Similarly, if you recently rolled over a workplace plan, reviewing the 5 mistakes people make when rolling over a 401k to an IRA can prevent compounding errors.

One often-overlooked option: if the deceased held appreciated employer stock in their 401(k), the Net Unrealized Appreciation (NUA) strategy may allow beneficiaries to pay long-term capital gains rates rather than ordinary income rates on that portion. This only applies to employer stock — not IRAs — but is worth exploring with a tax advisor if the estate includes workplace retirement accounts.

Frequently Asked Questions

Do I have to take money out of an inherited IRA every year?

It depends on whether the original owner had started RMDs before death. If they had, non-spouse beneficiaries must take annual distributions during the 10-year window. If the owner died before their Required Beginning Date, annual withdrawals are not required — only full depletion by year 10.

What happens if I miss an inherited IRA distribution?

Missing a required distribution triggers a 25% excise tax on the amount not withdrawn. SECURE 2.0 reduced this from 50% and added a correction window: if you fix the shortfall within two years, the penalty drops to 10%. The IRS also waived penalties for missed distributions through 2024 under Notice 2024-35.

Can a surviving spouse treat an inherited IRA as their own?

Yes. A surviving spouse has the unique option to roll the inherited IRA into their own IRA, effectively resetting the RMD clock to their own Required Beginning Date. Alternatively, they can treat it as an inherited IRA and use their own life expectancy for distributions — whichever produces the better outcome.

Are inherited Roth IRA withdrawals taxable?

Qualified withdrawals from an inherited Roth IRA are tax-free, provided the original account was at least five years old. Non-EDB beneficiaries must still empty the Roth IRA within 10 years but owe no annual RMDs and pay no taxes on qualified distributions.

What are the inherited IRA rules if the account owner died in 2019 or earlier?

If the original owner died before January 1, 2020, the old stretch IRA rules still apply. Beneficiaries in this situation can continue taking distributions over their own life expectancy using the Single Life Expectancy Table. The SECURE Act’s 10-year rule only applies to owners who died on or after January 1, 2020.

Can I disclaim an inherited IRA?

Yes. A beneficiary can disclaim (refuse) an inherited IRA within 9 months of the original owner’s death. The account then passes to the contingent beneficiary. Disclaiming is irreversible and is typically used for estate planning purposes, such as redirecting assets to a lower-tax-bracket heir.