10-Year Rule for Inherited IRA

If you inherited an IRA and someone told you, “You have 10 years,” they were probably talking about the 10-year rule created by the SECURE Act. In plain English, it usually means you must fully withdraw the inherited IRA by December 31 of the 10th year following the year of the original owner’s death.

But there is a twist that trips up a lot of people: depending on when the IRA owner died and whether they had started their own required minimum distributions (RMDs), you may also have to take annual withdrawals during years 1 through 9. Miss a required withdrawal and the IRS can assess penalties.

What the 10-year rule is

The 10-year rule is a tax-law distribution rule under the SECURE Act that applies to many inherited IRAs when the beneficiary is not the spouse. Under this rule:

• No later than the end of year 10, the inherited IRA balance must be $0.
• You can usually choose how to take the money out (all at once, gradually, or unevenly), as long as the deadline is met.

The deadline is December 31 of the 10th year following the year of death. Example: if the account owner died in 2025, the inherited IRA generally must be emptied by December 31, 2035.

This rule mostly exists because Congress wanted inherited retirement accounts to be used sooner rather than stretched over a beneficiary’s lifetime.

Who the 10-year rule applies to (most of the time)

The 10-year rule commonly applies when:

• You inherited an IRA from someone who was not your spouse, and
• You are not considered an eligible designated beneficiary (more on that in a minute), and
• The inheritance is after the SECURE Act changes (generally for deaths in 2020 and later).

In other words, many adult children who inherit a parent’s IRA are in the 10-year world now.

The big exceptions

If you are an eligible designated beneficiary (EDB), you can often take distributions over a longer period (often based on life expectancy), instead of being forced to drain the account within 10 years.

EDBs generally include:

• Surviving spouse
• Minor child of the original account owner (note: once they reach the age of majority, a 10-year clock typically starts. Under SECURE 2.0 for this rule, that age is generally 21.)
• Disabled individual (as defined under IRS rules)
• Chronically ill individual
• An individual who is not more than 10 years younger than the original account owner (for example, a sibling close in age)

If you think you might fall into one of these categories, it is worth confirming with the IRA custodian and a tax professional because the paperwork and definitions matter.

The confusing part: yearly RMDs in years 1 through 9?

This is where a lot of inherited IRA mistakes happen.

Here is the key distinction:

• If the original IRA owner died on or after their required beginning date (RBD) for RMDs, many non-EDB designated beneficiaries under the 10-year rule must take annual RMDs in years 1 through 9, and still empty the account by the end of year 10.
• If the original IRA owner died before their RBD, many beneficiaries can take no annual withdrawals in years 1 through 9, as long as the account is fully emptied by the end of year 10.

Recent update: The IRS issued final regulations in July 2024 confirming that when the owner died on or after their RBD, those annual RMDs are required. Practically speaking, many beneficiaries will see this requirement apply starting in 2025.

There has also been IRS penalty relief for certain recent tax years related to the confusion around inherited IRA RMDs. The relief has not applied to every situation, and it has changed over time, so it is worth confirming which years (if any) apply to you.

If you only remember one thing: do not assume you can wait until year 10. Many beneficiaries can, but some cannot.

Inherited IRA 10-year rule examples

Example 1: You inherit a traditional IRA from a parent

Your parent dies in 2025 and you inherit their traditional IRA in 2026. You are an adult child, so you are usually not an eligible designated beneficiary.

• You generally must empty the IRA by December 31, 2035.
• If your parent died on or after their RBD, you may also need to take annual RMDs in years 1 through 9 (then drain the rest by the year-10 deadline). If your parent died before their RBD, you may be able to wait and withdraw on your own schedule as long as you meet the year-10 deadline.

Example 2: You inherit a Roth IRA

Roth IRAs do not have RMDs for the original owner, but beneficiaries still have distribution rules. Many non-spouse beneficiaries are still subject to the 10-year empty-the-account deadline.

The tax benefit is that qualified Roth withdrawals are typically tax-free, but the timing still matters for planning. Also note: if the Roth IRA does not meet the 5-year rule, part of a distribution can be taxable.

Example 3: Spouse beneficiary

If you inherit your spouse’s IRA, you typically have options that can be more flexible than the 10-year rule, including treating it as your own IRA in many situations. In some cases, a spouse can also choose to keep it as an inherited IRA, and the better choice can depend on your age and cash flow needs.

Spousal choices can be powerful, but they are also easy to mess up. If you are a spouse beneficiary, it is worth slowing down and choosing intentionally.

How withdrawals are taxed

Taxes depend on what type of IRA you inherited:

Traditional inherited IRA

• Withdrawals are usually taxed as ordinary income.
• Big withdrawals can push you into a higher tax bracket and can also affect things like college aid formulas and certain tax credits.

Roth inherited IRA

• Withdrawals are often tax-free if the Roth was held long enough to be qualified.
• The 10-year deadline can still apply, even if taxes do not.

One planning idea I like: if the inherited account is taxable (traditional IRA), consider spreading withdrawals across years where your income is lower to reduce the chance of stacking income on top of a high-earning year.

Penalties for missing the rules

If an RMD is required and you do not take it on time, the IRS can assess an excise tax. Under SECURE 2.0, the missed RMD penalty was reduced from 50% to 25%, and it can be reduced to 10% if corrected promptly (and other requirements are met).

There have also been relief periods for certain inherited IRA RMD confusion in recent years, but the safest move is:

• Figure out whether annual required distributions apply to you.
• Calendar the deadlines.
• Keep documentation of what you withdrew and when.

Also, remember that the 10-year rule itself has a hard stop: if the account is not emptied by the end of year 10, you can run into penalties.

Smart ways to plan withdrawals

Here are a few approaches that work well in real life:

1) Spread withdrawals to manage taxes

If it is a traditional inherited IRA, consider taking a roughly even amount each year, adjusting around life events like job changes, parental leave, or a one-time bonus year.

2) Use low-income years on purpose

If you expect a temporary dip in income, those can be great years to take larger withdrawals at a lower tax rate.

3) Be careful with waiting until year 10

Even if you are allowed to wait, doing so can create a tax bomb: one huge distribution added to your regular income in a single year.

4) Coordinate with other goals

Some people use inherited IRA withdrawals to:

• Pay off high-interest debt
• Build an emergency fund
• Max out their own Roth IRA or workplace retirement plan (if eligible)
• Cover a specific expense like a home repair

Quick checklist

1. Confirm the beneficiary type: spouse, eligible designated beneficiary, or non-eligible designated beneficiary.
2. Confirm whether you are a designated beneficiary at all: if the beneficiary is an estate, charity, or some trusts, different rules can apply.
3. Get the date of death and the year the 10-year clock ends.
4. Ask whether annual RMDs apply in years 1 through 9 based on whether the decedent died before or on/after their RBD.
5. Open the inherited IRA correctly (title and registration matter).
6. If there are multiple beneficiaries, ask about splitting into separate inherited IRAs and the deadline to do it, so each beneficiary gets the right treatment.
7. Choose a withdrawal plan that fits your tax bracket and cash needs.
8. Set reminders for any annual deadlines.

Frequently asked questions

Can I take nothing for 9 years and withdraw everything in year 10?

Sometimes, yes. But if the original owner died on or after their RBD, many beneficiaries must take annual RMDs in years 1 through 9, and then still empty the account by the year-10 deadline. Also, waiting can create a large tax hit if it is a traditional IRA.

Does the 10-year rule apply to inherited Roth IRAs?

Often, yes for non-spouse beneficiaries. The difference is that qualified Roth withdrawals are typically tax-free, but you still may have to empty the account by the end of year 10. If the Roth is not qualified under the 5-year rule, part of a distribution can be taxable.

What if there are multiple beneficiaries?

Rules can vary based on whether the IRA is split into separate inherited accounts and how the beneficiaries are classified. Getting accounts separated correctly and on time can matter.

Is the 10-year rule the same as the old stretch IRA?

No. Before the SECURE Act, many beneficiaries could stretch distributions over their life expectancy. The 10-year rule largely replaced that for many non-spouse beneficiaries.

Bottom line

The 10-year rule for an inherited IRA is usually simple in concept: empty the account by the end of year 10. The real-world complications are (1) who qualifies for exceptions and (2) whether you also owe annual required withdrawals before that final deadline.

If you are unsure which bucket you fall into, get the IRA owner’s date of death, ask whether they had started RMDs (and whether they died before or on/after their RBD), and confirm your beneficiary classification. A quick call with the custodian and a tax pro can prevent a very expensive mistake.