RMDs · 9 min read
The Inherited IRA 10-Year Rule: Who Is on the Clock, and How the Withdrawals Can Be Paced
Most non-spouse beneficiaries of an IRA owner who died in 2020 or later must empty the account by December 31 of the tenth year after the death. If the owner had already reached the required beginning date, final regulations effective 2025 also require annual RMDs in years one through nine. Spouses and a few other heirs have different options.
An inherited IRA comes with a schedule that the heir did not choose. Since the SECURE Act, most beneficiaries who are not the surviving spouse have a fixed window to empty the account, and final regulations issued in July 2024 added annual withdrawals inside that window for many of them. The rules are detailed but predictable. We find the useful work begins once the schedule is known: deciding how to spread taxable income across the years the rules allow.
What follows is educational. How the rules apply to a specific account should be confirmed with a tax professional.
What an Heir Is Really Asking
Most questions about an inherited IRA reduce to three:
- Which rule applies to me? That depends on the heir’s relationship to the owner and on whether the owner had started required distributions.
- What must come out, and when? A final deadline, and in many cases an annual minimum as well.
- How should the rest be timed? The rules set a floor and a deadline. Between them, the timing is a tax decision.
Who Is on the 10-Year Clock
For owners who died in 2020 or later, beneficiaries fall into three groups. (IRS, Retirement topics: beneficiary; IRS Publication 590-B)
| Beneficiary group | Who is in it | Distribution rule |
|---|---|---|
| Eligible designated beneficiaries | The surviving spouse; the owner’s minor child; a disabled or chronically ill individual; anyone not more than 10 years younger than the owner | May take distributions over life expectancy. If the owner died before the required beginning date, the 10-year rule can be elected instead |
| Other designated beneficiaries | Individuals outside that list, most often adult children and grandchildren | Account emptied by December 31 of the tenth year after the year of death |
| Beneficiaries that are not individuals | For example, the owner’s estate | The pre-2020 rules: a 5-year deadline if the owner died before the required beginning date, otherwise the owner’s remaining life expectancy |
Several details decide which row applies:
- Counting starts the year after death. For a death in 2026, the account must be empty by December 31, 2036.
- “Minor child” means the owner’s own child. A grandchild named directly is on the 10-year clock from the start. The owner’s child takes life-expectancy payments until 21, and the 10-year clock then runs to December 31 of the year containing the tenth anniversary of reaching that age. (IRS Publication 590-B; Final regulations, 89 Fed. Reg., July 19, 2024)
- Beneficiaries are fixed on September 30 of the year after death. Someone who disclaims or is paid out in full before then is disregarded. (IRS Publication 590-B)
When Annual RMDs Apply Inside the Window
For several years it was unclear whether the 10-year window was only a deadline or also carried yearly minimums. The final regulations settled it, applying to distribution years beginning on or after January 1, 2025. (IRS, IR-2024-190; Final regulations, 89 Fed. Reg., July 19, 2024) The answer turns on the owner’s status at death:
| Owner at death | Years 1–9 | Year 10 |
|---|---|---|
| Had reached the required beginning date (April 1 after the year of reaching RMD age, currently 73) | Annual RMD required, based on the beneficiary’s life expectancy | Remaining balance must come out |
| Died before the required beginning date | No minimum; timing is the beneficiary’s choice | Entire balance must come out |
The annual amount is the prior year-end balance divided by a life-expectancy factor from the IRS Single Life Table, using the beneficiary’s age in the year after death and subtracting one for each later year. When the owner died after the required beginning date, the beneficiary uses the longer of that figure or the owner’s own remaining life expectancy. (IRS Publication 590-B, Appendix B) The owner’s unpaid RMD for the year of death, if any, is also the beneficiary’s responsibility. (IRS, Retirement topics: beneficiary)
During the transition, the IRS waived the excise tax on missed annual beneficiary distributions for 2021 through 2024, in Notices 2022-53, 2023-54 and 2024-35. (IRS Notice 2024-35) 2025 was the first year the annual minimums carried the penalty. A beneficiary who inherited between 2020 and 2024 from an owner past the required beginning date is on the annual schedule now, even if nothing has been withdrawn yet. A shortfall is taxed at 25 percent, or 10 percent if corrected within the correction window; see the missed-RMD penalty.
The annual minimum and the year-10 deadline are independent. Meeting one does not satisfy the other, and a beneficiary on the annual schedule must meet both.
Spouses, Inherited Roth IRAs, and How Distributions Are Taxed
- A surviving spouse has the widest set of options, including keeping the account as an inherited IRA, taking life-expectancy payments, or rolling it into the spouse’s own IRA. (IRS, Retirement topics: beneficiary) A spouse under 59½ often weighs access against deferral: distributions from an inherited IRA carry no 10 percent additional tax, but once the spouse treats the account as his or her own, withdrawals before 59½ can. (IRS Publication 590-B) Treating the account as the spouse’s own is a consequential election that should be made deliberately.
- An inherited Roth IRA follows the same 10-year deadline for non-eligible beneficiaries, with no annual minimums. Roth owners have no lifetime RMDs, so the owner is always treated as dying before the required beginning date. Qualified distributions are federally tax-free, and the owner’s five-year clock carries over to heirs; see the two Roth five-year clocks.
- Traditional inherited IRA distributions are ordinary income to the beneficiary in the year received. Beneficiaries of any age owe no 10 percent additional tax on them.
A Hypothetical Heir, Worked Through
This illustration is hypothetical and simplified. It is not based on any client, assumes no investment growth, applies 2026 federal brackets to every year, ignores state tax, and is not a recommendation.
An adult child, age 49, inherits a $600,000 traditional IRA in 2026 from a parent who died at 82 after taking that year’s RMD. The child is married, files jointly, and has $150,000 of taxable income before any IRA withdrawals. Because the parent was past the required beginning date, the child owes annual RMDs in 2027 through 2035 and must empty the account by December 31, 2036.
In 2027 the child is 50, with a Single Life Table factor of 36.2; the parent’s remaining factor would be 9.9 − 1 = 8.9, so the child’s longer factor applies. (IRS Publication 590-B, Appendix B) With no growth, each annual RMD works out to $600,000 ÷ 36.2 = $16,575, because the factor falls by one each year as the balance falls. Two ways to meet the rules:
| Path A: minimums, then the rest in year 10 | Path B: equal withdrawals of $60,000 a year | |
|---|---|---|
| Years 1–9 (2027–2035) | $16,575 a year, $149,171 in total | $60,000 a year, $540,000 in total |
| Year 10 (2036) | $450,829 | $60,000 |
| Highest taxable income in any year | $150,000 + $450,829 = $600,829 | $150,000 + $60,000 = $210,000 |
| Top bracket reached | 35% | 22% |
| Added federal tax over the decade | about $158,200 | $132,000 |
Joint brackets for 2026: 22% above $100,800, 24% above $211,400, 32% above $403,550, 35% above $512,450. (IRS, 2026 inflation adjustments)
Path B keeps every withdrawal in the 22 percent bracket: 10 × $60,000 × 22% = $132,000. Path A pays 22 percent on the small annual RMDs, about $32,800 in total, then about $125,400 in year 10 as $450,829 climbs through the 22, 24, 32 and 35 percent brackets. The difference is roughly $26,200, from timing alone. With investment growth, the year-10 balance on Path A would be larger and the gap would typically widen.
Both paths satisfy the rules. Leaving most of the balance for year 10 costs this heir about $26,200 more in federal tax, because one return absorbs $450,829.
How We Approach This in a Plan
We work on inherited accounts from both sides: with owners deciding what they leave, and with heirs deciding how to draw it down.
- For heirs, a ten-year income map. We project the heir’s own income across the window, including years with lower earnings, a sabbatical or early retirement, and place withdrawals where brackets are lowest. The same thinking drives our guide to withdrawal sequencing.
- Calendared minimums. Annual RMDs and the year-10 date are tracked from the date of death alongside the heir’s own accounts; the general mechanics are in our RMD guide.
- Medicare for older heirs. A beneficiary who is already 63 or older should expect large withdrawals to feed income-related Medicare premiums two years later; see the IRMAA cliff.
- For owners, the tax character of what is left. Pre-tax IRA money remains taxable to heirs, unlike many taxable assets that can receive a step-up in basis at death. Converting some of it during the owner’s lifetime, at the owner’s bracket, can leave heirs Roth money instead; the trade-offs are in Roth conversions: when they pay off.
- Beneficiary forms. Designations decide which row of the table applies. We review them with the household’s estate attorney rather than treating them as paperwork.
Questions Worth Answering Before You Decide
- When did the owner die, and had the owner reached the required beginning date?
- Is the beneficiary a spouse, the owner’s minor child, disabled or chronically ill, or within 10 years of the owner’s age?
- Was the owner’s RMD for the year of death fully taken, and if not, who is taking it?
- Has every annual minimum since 2025 been taken, and does any shortfall need correcting?
- What will the heir’s other income look like over the next ten years, and which years have the most bracket room?
- Is any part of the account a Roth IRA, and has the owner’s five-year clock been met?
What This Does Not Mean
- It does not mean the money must come out quickly. The rules set a deadline and, for some heirs, a modest annual floor. Within those, timing is a choice.
- It does not mean waiting is always costly. For a Roth IRA, or an heir expecting a much lower bracket in a later year, deferring can be reasonable.
- It does not mean a surviving spouse faces the same deadline. Spouses have separate options, including treating the account as their own.
- It is not personalized advice. Beneficiary elections and withdrawal timing should be reviewed with a tax professional, and estate planning with an attorney.
Frequently Asked Questions
Q: Who has to empty an inherited IRA within 10 years?
Most beneficiaries of owners who died in 2020 or later who are not eligible designated beneficiaries, most often adult children and grandchildren. Spouses, the owner’s minor children, disabled or chronically ill heirs, and heirs not more than 10 years younger than the owner have other options.
Q: Do I have to take money out every year or only by year 10?
If the owner had reached the required beginning date, both: an annual RMD in years one through nine and the full balance by the end of year 10, under final regulations applying from 2025. If the owner died before that date, only the year-10 deadline applies.
Q: How is the annual RMD on an inherited IRA calculated?
Divide the prior year-end balance by the beneficiary’s factor from the IRS Single Life Table for the year after death, reduced by one each later year. A 50-year-old’s starting factor is 36.2, so a $600,000 balance requires about $16,575.
Q: What happens if I missed an annual RMD on an inherited IRA?
Missed annual amounts for 2021 through 2024 were excused under IRS notices. Beginning in 2025, a shortfall carries a 25 percent excise tax, reduced to 10 percent if corrected within the correction window.
Q: Do inherited Roth IRAs have to be emptied in 10 years?
Yes, for non-eligible beneficiaries, but with no annual RMDs along the way. Qualified distributions are federally tax-free, so the account can often stay invested until year 10.
Q: Is there a penalty for withdrawing from an inherited IRA before age 59½?
No. Distributions to a beneficiary carry no 10 percent additional tax at any age. Traditional inherited IRA withdrawals are still ordinary income. A spouse who treats the account as his or her own loses this exception.
Bring the decision in front of you.
The first conversation is 30 minutes. A recent statement helps; no preparation is needed.
Sources and further reading
Next steps
Keep reading
Get new guides by email.
An occasional email when we publish a new guide: the short answer, and what it may mean for your portfolio and your plan.
The views and opinions expressed here are those of The Financial Sciences Company as of the publish date and are provided for informational and educational purposes only. They are not personalized investment, tax, or legal advice. The Financial Sciences Company, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. Additional information is available in our Form ADV at adviserinfo.sec.gov.
General educational information, current as of 2026. Figures and rules change. For guidance specific to your situation, speak with a qualified professional.