What Is the 10-Year Rule for an Inherited IRA?

If you inherited an IRA, you have probably seen the phrase “10-year rule” and felt your stomach drop a bit. I get it. Inherited IRA rules changed in a big way, and the penalty for getting distributions wrong can be steep.

Here is the simple version: the 10-year rule generally means you must withdraw all money from an inherited IRA by December 31 of the 10th year after the year of the original owner’s death. But the details depend on (1) your relationship to the person who died, (2) when they died, and (3) whether they had already started taking required minimum distributions.

The 10-year rule in plain English

The 10-year rule comes from the SECURE Act (it generally applies to deaths after 2019). For many beneficiaries, it replaced the old “stretch IRA” approach where you could take small withdrawals over your lifetime.

Under the 10-year rule:

• You can take withdrawals in any pattern you want during years 1 through 10.
• But the account must be fully emptied by the end of year 10.
• If you miss the deadline, the IRS can assess penalties.

Quick example: If the IRA owner died in 2024, the inherited IRA generally must be emptied by December 31, 2034 (the end of the 10th year after 2024).

Who has to follow the 10-year rule?

In most cases, the 10-year rule applies to non-spouse beneficiaries who are not in a special exception group. The IRS calls the exception group Eligible Designated Beneficiaries (EDBs).

Typically subject to the 10-year rule

• Adult children (most common scenario)
• Grandchildren
• Siblings (unless they qualify as EDBs, for example if they are disabled)
• Friends or other non-family beneficiaries
• Many trusts named as beneficiaries (trust rules get technical fast, and the outcome can depend on the trust type and who benefits from it)

Usually not subject to the 10-year rule (or get special options)

These are the common Eligible Designated Beneficiaries who may be able to take distributions over a longer period (often life expectancy), at least initially:

• Spouse of the deceased (has the most flexible options)
• Minor child of the deceased (not a grandchild). Note: once the child reaches the applicable majority age under the rules, the 10-year clock generally begins. The exact “majority” definition can be nuanced, so this is a good place to confirm with a pro.
• Disabled beneficiary (as defined by IRS rules)
• Chronically ill beneficiary
• Someone not more than 10 years younger than the deceased (often a close-in-age sibling or partner)

The confusing part: yearly RMDs

This is where people get tripped up.

There are two different concepts that can apply to the same inherited IRA:

• Annual RMDs (required minimum distributions each year)
• The 10-year deadline (account must be empty by the end of year 10)

Whether annual RMDs are required during years 1 through 9 can depend on whether the original owner died before or after their required beginning date (the point when they had to start taking RMDs).

Big clarity point: If the owner died after their required beginning date, many non-EDB beneficiaries are expected to take annual RMDs in years 1 through 9 (subject to current IRS guidance and any transition relief), and still empty the account by year 10.

If the owner died before starting RMDs

In many cases, you may be allowed to wait and withdraw any amount you want, as long as the account is empty by the end of year 10.

If the owner died after starting RMDs

In many cases, you may need to take annual RMDs in years 1 through 9, and still empty the account by year 10.

If you are unsure which situation you are in, ask the IRA custodian: “Did the original owner die before or after their required beginning date for RMDs?” That one question often clarifies your next step.

Important: IRS guidance around annual RMD enforcement under the 10-year rule has changed and evolved in recent years, including transition relief in certain years. Because penalties can be large, it is smart to confirm the current expectations with a tax pro for your specific inherited IRA. Also, custodians can help with account mechanics, but they may not provide tax advice, so do not be surprised if they refer you back to a CPA or enrolled agent for the final call.

Traditional vs Roth: same deadline, different tax feel

The 10-year rule is about when money must come out. Taxes depend on what type of IRA you inherited.

Inherited traditional IRA

• Withdrawals are generally taxable as ordinary income.
• Large withdrawals can bump you into a higher tax bracket.
• Spreading withdrawals across multiple years can sometimes reduce the total tax bite.

Inherited Roth IRA

• Withdrawals are often tax-free if the Roth IRA met the 5-year rule.
• You still must follow the 10-year empty-the-account deadline in many cases.
• Key clarification: For beneficiaries subject to the 10-year rule, inherited Roth IRAs generally do not have annual RMDs in years 1 through 9. Roth IRA owners do not have lifetime RMDs, so they are treated as having died before their required beginning date.
• A common strategy is letting the Roth continue growing tax-free and taking the money closer to year 10, as long as you do not miss the year-10 deadline.

Simple withdrawal strategies

There is no one perfect pattern, but here are a few real-world approaches that work for everyday budgets.

1) Even withdrawals

Take roughly 1/10th of the account each year. This can:

• Reduce the risk of a big tax surprise in year 10
• Make it easier to plan withholding
• Feel more predictable

2) Bracket-aware withdrawals

Estimate your taxable income each year and withdraw “up to” the top of a tax bracket you are comfortable with. This is especially useful if your income fluctuates.

3) Delay then withdraw

If annual RMDs are not required and it is a Roth, some beneficiaries wait, then withdraw near the end of the 10-year window. This can maximize tax-free growth, but you must be disciplined about the deadline.

Common mistakes

Missing the year-10 deadline

The rule is not “about 10 years from when you open the inherited IRA.” It is tied to the year of death. Mark the deadline on your calendar for the year you must empty the account: December 31 of the 10th year after the year of death.

Assuming you can roll it into your own IRA

Most non-spouse beneficiaries cannot treat an inherited IRA as their own. Spouses often can, but the best move depends on age, RMD timing, and goals.

Forgetting about withholding

Inherited traditional IRA withdrawals can create a tax bill. Consider setting tax withholding on distributions so you are not scrambling at tax time.

Not confirming beneficiary type

Rules differ for individuals, certain trusts, and estates. If the beneficiary is a trust or the estate, the payout rules can shift dramatically, and you may be dealing with a different rule set entirely.

Quick FAQ

Do I have to take a distribution every year?

Sometimes. Many beneficiaries must empty the account by year 10, but annual RMDs may or may not be required depending on when the original owner died and whether they had started RMDs.

What if there are multiple beneficiaries?

It depends on how the IRA was handled after death. In some cases each beneficiary can have their own inherited IRA. In other cases, beneficiaries are stuck sharing one account, which can complicate distribution planning.

What is the penalty for not taking a required distribution?

The missed-RMD penalty is an excise tax, and it has changed in recent years. Under SECURE 2.0, it is generally 25% of the amount not taken, and it can drop to 10% if corrected in a timely manner. The IRS can also waive the penalty in some situations if you fix the issue and show reasonable cause. If you think you missed something, address it quickly with the custodian and a tax pro.

Does the 10-year rule apply if I inherited before 2020?

Often no. Many inherited IRAs from deaths before 2020 were governed by the older rules. But if you inherited more recently, the SECURE Act framework is usually in play.

One more wrinkle: the 5-year rule

Not every inherited IRA lands under the 10-year rule. If there is no designated beneficiary, such as when an estate is the beneficiary or a trust does not qualify as a “see-through” trust, a 5-year rule may apply in some situations. That is a big deal, and it is worth getting professional help if a trust or estate is involved.

A simple checklist

1. Confirm the year of death and your beneficiary type (spouse, non-spouse, EDB, trust, estate).
2. Ask whether the original owner had started RMDs.
3. Get the exact empty-by date from the custodian. They may not give tax advice, but they can often confirm how they are coding the account and what distribution options they allow.
4. Decide your withdrawal plan (even, bracket-aware, or other).
5. Set tax withholding if you inherited a traditional IRA.
6. Re-check each year so year 10 does not sneak up on you.

If you want the “financially savvy friend” advice: do not wait until year 10 to think about this. A 10-minute planning session now can prevent a five-figure tax headache later.

Important note

This article is for educational purposes and is not tax or legal advice. Inherited IRA rules are detail-heavy and depend on your exact situation. If you are inheriting a large IRA, if a trust is involved, or if you are unsure about annual RMD requirements, a CPA or enrolled agent can be worth every penny.