Retirees inherit IRAs from parents, siblings, and spouses. For deaths after 2019, the SECURE Act replaced the old stretch IRA rules for most beneficiaries with a 10-year deadline. Then the IRS proposed regulations that surprised everyone by requiring annual distributions within those 10 years in some cases, and issued a series of notices waiving the tax while it finalized the rules.
The result was confusion. The confusion was understandable. It no longer protects you.
Who the 10-year rule applies to
IRC 401(a)(9)(H) divides beneficiaries into groups. An "eligible designated beneficiary" can still stretch distributions over a life expectancy, subject to rules. Eligible designated beneficiaries are:
- The surviving spouse.
- A minor child of the account owner, until reaching the age of majority.
- A disabled individual.
- A chronically ill individual.
- An individual not more than 10 years younger than the account owner.
Most other individual beneficiaries, such as adult children and grandchildren, are designated beneficiaries subject to the 10-year rule: the entire account must be distributed by December 31 of the tenth year after the year of death.
Retirees inheriting from a sibling or friend close in age often qualify as eligible designated beneficiaries under the 10-years-younger test. Check before assuming the 10-year rule applies to you.
When annual RMDs are required within the 10 years
The final regulations issued in 2024 draw a line based on when the owner died:
| Owner died | Beneficiary subject to 10-year rule must |
|---|---|
| Before the owner's required beginning date | Empty the account by the end of year 10; no annual RMDs in years 1 through 9 |
| On or after the owner's required beginning date | Take annual RMDs in years 1 through 9 and empty the account by the end of year 10 |
The logic is that once the owner had started required distributions, the account cannot slow down after death. If your parent was already taking RMDs when they died, you generally must take annual RMDs too.
Roth IRA owners are treated as dying before their required beginning date, because they have none. Beneficiaries of inherited Roth IRAs under the 10-year rule generally need to empty the account by year 10 but do not face annual RMDs in years 1 through 9.
The penalty relief years
Because the proposed regulations surprised beneficiaries, the IRS issued Notice 2022-53, Notice 2023-54, and Notice 2024-35. Taken together, they provided that the IRS would not assert the section 4974 excise tax for missed annual RMDs under the 10-year rule for 2021 through 2024, for beneficiaries of owners who died in 2020 through 2023 on or after their required beginning dates. Notice 2024-35 said the final regulations were expected to apply starting in 2025.
So: missed annual inherited RMDs for 2021 through 2024 in that situation generally were covered by IRS relief. 2025 and later years are not covered by those notices.
Importantly, the relief did not extend the 10-year deadline. The clock started in the year after death regardless.
What to do now
- Identify the year of death and whether the owner had reached the required beginning date. See RMD ages and the required beginning date.
- Identify your beneficiary category: spouse, other eligible designated beneficiary, or designated beneficiary subject to the 10-year rule.
- Calendar the 10-year deadline, December 31 of the tenth year after death.
- If annual RMDs apply, compute this year's using the Single Life Table in Treas. Reg. 1.401(a)(9)-9 under the rules in Publication 590-B, and take it by December 31.
- If you missed a 2025 annual RMD, take it now and file Form 5329, requesting a waiver for reasonable error. Confusion over a rule that changed several times is a reasonable explanation. See RMD penalty waivers on Form 5329.
Documents to keep
Inherited account problems often turn on dates that are hard to reconstruct later. Keep a copy of the death certificate, the owner's date of birth, the beneficiary designation form or the custodian's confirmation of beneficiaries, and the year-end statement for the year of death. Those documents answer whether the owner died before or after the required beginning date, which beneficiary category you are in, and when your 10-year clock ends.
Spouses have more options
A surviving spouse can generally treat the inherited IRA as their own, roll it into their own IRA, or remain a beneficiary. Each choice changes when RMDs start and how they are calculated. A younger surviving spouse who needs the money before 59 and a half may prefer to stay a beneficiary for a time, because distributions to a beneficiary are exempt from the 10 percent additional tax under IRC 72(t)(2)(A)(ii), while distributions from the spouse's own IRA are not. SECURE 2.0 also lets a surviving spouse elect to be treated as the deceased spouse for RMD purposes in some situations. Get the decision right before you move money.
Tax planning inside the 10 years
Every inherited IRA distribution is taxable to the beneficiary, other than Roth qualified distributions and basis. A retiree who waits until year 10 to empty a large inherited IRA can create one enormous tax year: more of their own Social Security becomes taxable under IRC 86, Medicare's income-related surcharges may apply two years later, and the senior deduction for 2025 through 2028 phases out. Spreading distributions across the 10 years, while meeting any annual minimum, usually costs less. See why retirees owe tax on Social Security.
An example
Say a 67-year-old in Largo inherited her father's IRA after he died in 2023 at age 85. He was well past his required beginning date, and she is more than 10 years younger, so she is a designated beneficiary subject to the 10-year rule with annual RMDs. The account must be empty by December 31, 2033. Under the IRS notices, she was not penalized for skipping annual RMDs in 2024. For 2025 forward, she must take an annual RMD each year based on her single life expectancy, reduced by one each year, and empty the account by 2033. If she missed 2025, she should take it now and file Form 5329 requesting a waiver. The facts are illustrative.
Trusts as beneficiaries
When an IRA names a trust as beneficiary, the distribution rules depend on how the trust is drafted and who its beneficiaries are. The final regulations contain detailed rules for "see-through" trusts. If you are the trustee or a beneficiary of a trust that inherited an IRA, have the trust reviewed against those rules. Mistakes there can trigger the same excise tax.
Inherited IRAs and IRS collection
If you owe the IRS, an inherited IRA is not treated like your own retirement savings for levy purposes. IRM 5.11.6.3 notes that inherited IRAs are not retirement funds for those procedures and are treated differently from accounts you own. Do not assume the protections described in can the IRS levy your IRA in Florida? apply to an inherited account.
Next step
Pull the death certificate date, the owner's date of birth, and the account statements, and confirm which rule applies to you. If you have missed annual RMDs from 2025 forward, fix them now and request a waiver. If you want help, call (813) 229-7100. The firm's page on penalty abatement covers relief for related penalties.
Questions people ask
Do I have to take annual RMDs from an inherited IRA under the 10-year rule?
If the owner died on or after their required beginning date, generally yes, in years 1 through 9, under the final regulations. If the owner died before that date, you only need to empty the account by the end of year 10.
Did the IRS waive penalties for missed inherited IRA RMDs?
Notices 2022-53, 2023-54, and 2024-35 provided relief for certain missed annual RMDs for 2021 through 2024. The final regulations apply starting in 2025, so later years are not covered by those notices.
Does the 10-year rule apply to a surviving spouse?
No. A surviving spouse is an eligible designated beneficiary under IRC 401(a)(9)(H) and has additional options, including treating the IRA as their own.
Is there a 10 percent penalty on inherited IRA withdrawals?
No. Distributions to a beneficiary after the owner's death are exempt from the 10 percent additional tax under IRC 72(t)(2)(A)(ii). A spouse who rolls the account into their own IRA loses that exemption for later withdrawals.
General information, not legal advice. Reading this page does not create an attorney-client relationship. Tax rules and dollar thresholds change; confirm the current figures for your tax year before acting.