Inherited IRAs and the 10-year rule: what a beneficiary has to take, and when

When someone leaves you an IRA, the account comes with a clock. For most people who inherit from someone who died after 2019, the whole balance has to be out within ten years. ³ Whether you also owe a withdrawal every year along the way depends on two things: who you are to the person who died, and whether they had already started their own required distributions. This page sorts out both, then covers the spouse's options, inherited Roth IRAs, and the one move a non-spouse beneficiary must not make.

The old stretch, and what replaced it

Before 2020, most individual beneficiaries could spread withdrawals from an inherited IRA over their own life expectancy. That was the "stretch." The SECURE Act changed it for owners who die after December 31, 2019: for most beneficiaries, the entire balance must be distributed within 10 years. ^{3 2} The IRS says this applies whether the owner died before, on or after their required beginning date. ³

The precise deadline is December 31 of the year containing the 10th anniversary of the owner's death. Publication 590-B's own example: if the owner died in 2025, the account must be fully distributed by December 31, 2035. ¹

Step one: which kind of beneficiary are you?

The rules split beneficiaries into groups, and the group decides the clock.

Eligible designated beneficiaries can still take withdrawals over their life expectancy instead of using the 10-year rule. ¹ There are five kinds:

• the owner's surviving spouse;
• the owner's minor child;
• a disabled individual;
• a chronically ill individual;
• any other individual who is not more than 10 years younger than the owner. ^{1 2}

Designated beneficiaries who are not eligible are every other individual named as a beneficiary: most adult children, grandchildren, nieces and nephews, and friends. For them, the account must be emptied within ten years of the owner's death. ¹

Beneficiaries that are not individuals, such as an estate, follow separate rules this page does not cover.

Two details matter here. A minor child is an eligible designated beneficiary only until reaching majority; from that date, the 10-year clock starts on whatever is left. ² And who counts as a beneficiary is settled on September 30 of the year after the owner's death, so a beneficiary who disclaims or is paid out in full by then is not counted. ¹

Step two: had the owner started required distributions?

This is the question that decides whether the window is open or comes with a schedule.

The owner died before their required beginning date. If the 10-year rule applies, no distribution is required for any year before the 10th year. ¹ You can take money out whenever you like, in any pattern, as long as the account is empty by the deadline.

The owner died on or after their required beginning date. Publication 590-B says a designated beneficiary bases required distributions for the years after the death on the longer of their own single life expectancy or the owner's. ¹ It also says a beneficiary who is not an eligible designated beneficiary must finish within ten years. ¹ Put together: yearly required withdrawals in years one through nine, and whatever remains out by the end of year ten. The final regulations confirm it: the preamble says they "do not eliminate the requirement for continued annual distributions" in this case. ⁵

That second case caught many beneficiaries by surprise after the law changed, and the IRS waived the excise tax on certain missed yearly distributions for 2021 through 2024. ⁴ It also announced that the final regulations apply to required distributions for calendar years beginning on or after January 1, 2025. ⁴ For 2025 and later, the yearly withdrawal is required.

Also in this case: if the owner died before taking their own required distribution for the year of death, the beneficiaries are responsible for taking it. ¹

If you are the surviving spouse

A spouse has the most options. If you are the sole beneficiary, you can treat the inherited IRA as your own, roll it into your own IRA or a qualified plan, or stay a beneficiary. ¹ Treating it as your own means the account follows your own required distribution schedule, as if it had always been yours. Staying a beneficiary can make sense in some situations, for example if you are younger than 59 and a half and may need the money, since distributions to a beneficiary after the owner's death avoid the early-distribution tax. ¹

If you are not the spouse: no rollovers

A non-spouse beneficiary cannot treat an inherited IRA as their own. That means no contributions to it, and no rollovers into or out of it. ¹ The money can move to another custodian only through a trustee-to-trustee transfer into an IRA set up in the name of the deceased owner for your benefit. ¹

This is the trap. If the custodian cuts you a check and you deposit it into your own IRA within the 60-day window that works for your own accounts, it does not work here. ¹ The check is a taxable distribution, and the deposit is not a valid rollover. Ask for a direct transfer, and make sure the new account is titled as an inherited IRA.

Inherited Roth IRAs

A Roth IRA has no required distributions while the owner is alive, but the beneficiaries do have them. ³ After the owner's death, the traditional IRA rules apply as though the Roth owner died before their required beginning date. ¹ So a non-eligible beneficiary of a Roth IRA has the 10-year deadline but no yearly withdrawals before the 10th year.

The tax side is friendlier. Distributions to a beneficiary are qualified, and so tax-free, once the 5-year period that began with the owner's first Roth contribution has passed. ¹ Many people use the full window, letting tax-free growth run as long as the rule allows.

What happens if a required withdrawal is missed

The shortfall can be subject to an excise tax of 25%, reduced to 10% if you take the missed amount within the correction window and report it. ³ The tax is figured on Form 5329. If you find a missed year, fix it promptly rather than waiting for a letter.