Inherited IRA Rules in 2026: The 10-Year Rule Explained

Quick Answer

Under the SECURE Act (2019), if you inherit an IRA from someone other than a spouse, you must empty the account within 10 years (by December 31 of the 10th year following death). Required Minimum Distributions (RMDs) are NOT required annually during the 10-year period (you can let it grow), but the full balance must be withdrawn by the deadline. Withdrawals are taxed as ordinary income. If you inherit a spouse's IRA, you can treat it as your own and avoid the 10-year rule.

The 2019 SECURE Act Changed Inheritance Rules

Before 2020, non-spouse beneficiaries could take "stretch" distributions over their lifetime (potentially 50+ years of tax-deferred growth).

Example (old rules pre-2020): You inherit a $500,000 IRA at age 40. You could take RMDs over your remaining 45-year life expectancy, stretching withdrawals and minimizing annual taxes.

The SECURE Act eliminated this for most beneficiaries (effective January 1, 2020).

New rule (SECURE Act): Non-spouse beneficiaries must withdraw the full inherited IRA balance by December 31 of the 10th year following the account owner's death.

Example (new rules post-2020): You inherit a $500,000 IRA when your parent dies in 2024. You must withdraw the full $500,000 by December 31, 2034 (10 years).

The 10-year window is the full timeframe to distribute; the IRS doesn't require annual distributions (RMDs) during the 10 years, but you must finish by year 10.

Exceptions to the 10-Year Rule

Certain beneficiaries are exempt from the 10-year rule and can still use the old "stretch" strategy:

1. Surviving spouse: Can treat the inherited IRA as their own (roll into their own IRA), deferring distributions until their age 73+ (RMD age).

2. Disabled or chronically ill beneficiaries: Can take lifetime distributions based on life expectancy.

3. Beneficiaries who are not more than 10 years younger than the account owner: Can use single life expectancy (stretch over their life, not 10 years).

4. Minor children: Can use the 10-year rule until they turn 18, then convert to the 10-year rule after.

For most people, the 10-year rule applies.

RMD Requirements During the 10 Years

Important distinction: The 10-year rule does NOT require annual RMDs. You can let the inherited IRA grow tax-deferred for years, then take a lump-sum withdrawal by year 10.

However, there are nuances:

• If the deceased had already started RMDs (reached age 73): As a beneficiary, you must continue taking RMDs (calculated on the original account owner's remaining life expectancy), but the full balance must still be distributed within 10 years.

• If the deceased had NOT yet started RMDs: You do NOT have to take RMDs during the 10 years. You can let it all grow until year 10, then withdraw the full balance.

Distribution Strategy: Maximizing Tax Efficiency

Since annual RMDs are not required (in most cases), you have flexibility:

Strategy 1: Wait until year 10, then withdraw

Pros:

• Maximize tax-deferred growth for 10 years.
• Minimize annual tax burden (no required income each year).

Cons:

• Year 10 withdrawal is a large lump sum, potentially pushing you into a higher tax bracket.
• If the inherited IRA is large, taxes in year 10 could be substantial.

Example: Inherit $500,000 IRA at age 40. Let it grow at 8% annually.

By year 10, it's worth ~$1,000,000. Withdraw the full $1,000,000 in year 10.

Tax liability: $1,000,000 × 24% (estimated bracket) = $240,000.

This could push you into the 32% or 35% bracket, increasing taxes beyond $240,000.

Strategy 2: Spread distributions over 10 years

Pros:

• Spread income across 10 years, potentially staying in lower brackets.
• Reduce tax impact each year.
• Still enjoy growth on the remaining balance.

Cons:

• Must be disciplined to withdraw annually (no automatic RMD rules).
• Withdrawals still subject to income tax each year.

Example: Inherit $500,000. Withdraw $50,000/year for 10 years (plus growth).

Year 1: Withdraw $50,000 (rest grows). Taxable: $50,000 × 24% = $12,000. Year 2: Withdraw ~$54,000 (8% growth on remaining $450,000 plus new contributions). Taxable: ~$13,000. ... Year 10: Withdraw final balance.

Total tax spread over 10 years is less punishing than a lump-sum withdrawal.

Which strategy? If your other income is modest, spreading withdrawals is safer (avoids pushing into higher brackets). If you're young and earning well, waiting until year 10 might be fine if you expect income to stay high anyway.

Roth vs. Traditional Inherited IRAs

Inherited Roth IRA: Distributions are NOT taxable (if original account owner held it 5+ years). You still must follow the 10-year rule, but withdrawals are tax-free.

Inherited Traditional IRA: Distributions are fully taxable as ordinary income.

Strategy: If you inherit both traditional and Roth IRAs, prioritize distributing the traditional IRA first (to pay taxes spread over 10 years), and save the Roth for last (no taxes, so can maximize growth).

Inherited Spousal IRAs: The Rollover Advantage

If you inherit your spouse's IRA, you can treat it as your own:

1. Roll the inherited IRA into your own IRA.
2. Defer distributions until you reach age 73 (when your own RMDs start).
3. Extend the deferral period significantly (potentially 20+ additional years if you're much younger than your spouse).

Example: Your spouse dies at 75 with a $500,000 IRA. You're 60.

• Without rollover: You must empty the inherited IRA within 10 years (by age 70).
• With rollover: You can defer until age 73, then take RMDs over your remaining life expectancy (potentially 20+ years).

The spousal rollover is powerful for extending tax-deferred growth.

Beneficiary Designation and Multiple Beneficiaries

If the account is left to multiple beneficiaries, the 10-year clock starts at the original owner's death for all beneficiaries.

Example: Parent dies in 2024. IRA is split between 3 children (ages 40, 45, 50). All three must empty their portion by December 31, 2034 (10 years from death).

The 10-year deadline is the same for all beneficiaries, regardless of age.

Some experts recommend "splitting" inherited IRAs into separate accounts for each beneficiary early (to allow individualized distribution strategies), but the 10-year deadline applies uniformly.

Creditor Protection

Generally, inherited IRAs have less creditor protection than IRAs you contribute to yourself. In bankruptcy or lawsuits, inherited IRAs may be more vulnerable.

Creditor protection varies by state. Consult an attorney if you have significant inherited IRA balances and liability concerns.

2025–2026 Potential Changes

Congress has proposed changes to inherited IRA rules, though nothing has passed as of 2026. Potential future changes might:

• Extend the 10-year rule to 15 years.
• Require annual RMDs during the 10-year period.
• Create different rules for inherited Roth vs. traditional.

For now, plan under the current 10-year rule, but review changes if Congress acts.

Examples: Withdrawal Planning

Scenario 1: Inherit $300,000 traditional IRA, age 50

• Option A: Withdraw $30,000/year for 10 years (ignoring growth). Tax: $30,000 × 24% = $7,200/year = $72,000 total over 10 years.
• Option B: Wait until year 10, withdraw full balance (with growth). Balance: ~$650,000. Tax: $650,000 × 24% = $156,000 one year.
• Option C: Withdraw $20,000/year (conservative), leaving balance to grow longer. By year 10, withdraw final $250,000+. Total tax: $150,000–$170,000 spread over 10 years.

Option C spreads tax burden and keeps you in lower brackets.

Scenario 2: Inherit $1,000,000 Roth IRA, age 40

• No tax on withdrawals.
• You can let it grow for 10 years ($2,000,000+ at 8% return).
• At year 10, withdraw the full $2,000,000 tax-free.
• Or spread withdrawals over 10 years, tax-free.

The Roth inherited IRA is much more flexible since there's no tax liability.

Documentation and Reporting

When you inherit an IRA, the custodian will issue:

• Form 5498-R: Shows the inherited IRA balance and your beneficiary status.
• Form 1099-R: Reports distributions you take (and tax withheld).

Report inherited IRA distributions on your Schedule 1 (Form 1040) as taxable income.

Keep records of:

• The account owner's death date (starts the 10-year clock).
• Distribution dates and amounts.
• Tax withheld.

Sources

• Internal Revenue Service. "Inherited IRAs and the SECURE Act." IRS.gov.
• Internal Revenue Service. "Inherited IRAs FAQ." IRS.gov.
• Department of Treasury. "SECURE Act Inherited IRA Rules." Treasury.gov.
• IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs).
• CFA Institute. "Strategies for Inherited Retirement Accounts."