Legacy · 5 min read · Updated November 10, 2026

Inherited IRAs and the 10-year rule

Illustrative examples, education not advice.

In plain words

Before 2020, many people who inherited an IRA could “stretch” withdrawals over their own lifetime. The SECURE Act ended that for most beneficiaries. For owners who died in 2020 or later, most non-spouse beneficiaries must empty the inherited account by the end of the 10th year after the year of death.

Final IRS regulations published in 2024 added an important detail. If the original owner had already started required minimum distributions (RMDs) before death, most beneficiaries must also take a withdrawal every year in years 1 through 9, and then empty the account in year 10. The IRS waived penalties for missed annual withdrawals from 2021 through 2024. From 2025 on, those yearly withdrawals are required.

If the owner died before their RMDs began, the beneficiary generally does not need yearly withdrawals but still must empty the account by the end of year 10.

The same rules generally apply to inherited 401(k)s and similar workplace accounts.

Who is covered, and the exceptions

Some beneficiaries, called eligible designated beneficiaries, can still stretch withdrawals over their life expectancy:

a surviving spouse (who also has the option to treat the IRA as their own);
the owner’s minor child, until age 21, after which the 10-year clock starts;
a beneficiary who is disabled or chronically ill;
a beneficiary not more than 10 years younger than the owner.

Beneficiaries that are not people, such as an estate or some trusts, often face faster payout rules.

How it helps real people

Understanding the rule lets heirs plan the tax instead of being surprised by it:

Spread withdrawals over the years to avoid pushing income into a high bracket.
Time larger withdrawals for low-income years, such as a career break or early retirement.
Avoid penalties for missed required withdrawals.
Help the owner plan. Parents can decide whether Roth conversions, charitable gifts or life insurance would leave heirs a better after-tax result.

A worked example

Illustrative. Carol died at 78, already taking RMDs. Her fictional daughter Nina, 50, inherits a $600,000 traditional IRA. Nina earns $140,000 a year and plans to retire at 60.

Approach	What happens (illustrative)
Take only the minimum each year, then the rest in year 10	Small withdrawals for 9 years, then a very large taxable lump in the year she turns 60, pushing her into a high bracket
Take roughly equal amounts each year	About $60,000 to $75,000 a year, depending on growth; adds steady taxable income on top of her salary
Take smaller amounts while working, larger amounts after she retires	Meets the yearly minimum while working, then larger withdrawals once her salary stops, if retirement falls inside the 10 years

Nina picks a mix, guided by a tax professional, to keep most withdrawals out of the highest brackets. Because she plans to stop working in year 10, she shifts more of the account into her lower-income years while still taking each year’s minimum.

These figures are illustrative only and not a tax calculation.

What owners can do now

Roth conversions. Converting some traditional IRA money to a Roth while alive means paying the tax now, possibly at a lower rate than your heirs would pay. Inherited Roth IRAs also follow the 10-year rule, but qualified withdrawals are generally tax-free.
Charitable giving. Leaving traditional IRA money to charity, and other assets to family, can be tax-efficient because a qualified charity generally pays no income tax on it.
Life insurance as a complement. Some owners use part of their RMDs to fund life insurance, which generally pays heirs income-tax-free, offsetting the tax heirs will owe on the IRA.
Beneficiary forms. Name people, or a carefully drafted trust, rather than your estate.

Who it’s for

Anyone who has inherited, or expects to inherit, a retirement account.
IRA owners who want to leave the account efficiently.
Families where heirs are in their peak earning years.

Who it’s not for

Surviving spouses usually have more flexible options, including treating the IRA as their own.
Very small inherited balances may simply be withdrawn in a way that keeps life simple, after checking the tax.

Risks and trade-offs

Taxes can be large if withdrawals bunch up in one year.
Missed yearly withdrawals can trigger an excise tax, generally 25%, which can drop to 10% if corrected in time.
Trusts as beneficiaries need careful drafting, or the payout may be faster than expected.
Roth conversions cost tax today and only pay off if the assumptions hold.
Rules have changed several times. Check current guidance each year.

Common mistakes

Assuming you can wait until year 10 when the owner had already started RMDs.
Taking a lump sum in year one without seeing the tax bill first.
Moving the money incorrectly. A non-spouse beneficiary generally cannot roll an inherited IRA into their own IRA. Use a trustee-to-trustee transfer to a properly titled inherited IRA.
Missing the owner’s final-year RMD. If the owner had not taken it before death, the beneficiary generally must.
Leaving the IRA to the estate by having no beneficiary on file.

FAQs

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

Yes, for most non-spouse beneficiaries. Because Roth owners have no lifetime RMDs, yearly withdrawals are generally not required, but the account must be emptied by the end of year 10.

When does the 10-year clock start?

It runs through December 31 of the 10th year after the year the owner died.

I inherited an IRA in 2021 and took nothing. Am I in trouble?

The IRS waived penalties on missed annual withdrawals for 2021 through 2024. The 10-year deadline itself was not extended. Speak with a tax professional about your schedule.

At what age do IRA owners start RMDs?

Generally age 73 under current law, rising to 75 for people born in 1960 or later.

Your next step

Ask VeraLife (/#ask) to sketch a withdrawal schedule for an inherited account based on your income in the years ahead.

Education, not advice. Examples are illustrative. VeraLife.ai is not a registered investment adviser, broker-dealer or insurance agency.