The Inherited IRA 10-Year Rule (and the 2024 Final Regs)

If you inherited an IRA from someone who died after December 31, 2019, and you are not an eligible designated beneficiary, you must empty the account by December 31 of the tenth year following the year of death. Whether you also owe annual distributions in years one through nine depends on one fact: whether the original owner had reached their Required Beginning Date and started RMDs.

What the 10-Year Rule Requires

The SECURE Act (effective January 1, 2020) eliminated the lifetime "stretch IRA" for most non-spouse beneficiaries and replaced it with the ten-year deadline.

If the owner died before their Required Beginning Date (RBD), for most people April 1 of the year after turning 73, no annual minimums apply: you can take nothing for nine years and drain the account in year ten.

If the owner had passed their RBD and was taking RMDs, Treasury Regulation 1.401(a)(9)-5, finalized in July 2024, requires annual RMDs in years one through nine, based on your own life expectancy, plus full distribution by the end of year ten.

Eligible designated beneficiaries (surviving spouses, minor children of the deceased, disabled or chronically ill individuals, and beneficiaries not more than ten years younger than the owner) can still stretch over life expectancy instead.

The Penalty Relief Is Over, and Other Watchouts

The IRS waived penalties for beneficiaries who skipped annual distributions in 2021 through 2024 while the statute was unsettled. Those waivers are expired, and the 2024 final regulations govern going forward.

• The ten-year clock runs from the year of death, not the year you open the inherited IRA. Inheriting in 2021 means a December 31, 2031 deadline.
• Successor beneficiaries (inheriting an already-inherited IRA) get their own ten-year window, generally from the original beneficiary's death.
• Inherited Roth IRAs face the ten-year rule too, but generally no annual RMDs, because Roth owners have no RBD.

Missing the deadline or a required annual distribution costs 25% of the shortfall, reduced to 10% if corrected within SECURE 2.0's correction window.

A Worked Example: When Front-Loading Makes Sense

A client in her mid-40s (this is illustrative, not a specific case) inherited a $400,000 traditional IRA from her father, who died at 76 already taking RMDs. Her year-one RMD was roughly $19,000 based on her single life expectancy. That was the floor, not the plan: her job income left room below the 24% bracket, so we modeled taking $55,000 per year early on, filling the bracket and leaving a small residual to clear in year ten. Every dollar left is eventually taxed as ordinary income, so pulling more forward at favorable rates lowers total tax across the window.

How This Connects to the Soil Layer of Your Plan

Inherited IRA strategy is a tax-architecture problem: not just when money must come out, but in which years it costs the least. That is the Soil layer of a plan, and it compounds when you hold your own retirement accounts or a Roth conversion schedule. The full framework lives on the parent page, RMDs and QCDs: The Required-Distribution Rules That Shape Retirement Income After 73.

Frequently Asked Questions

Does the 10-year rule apply to a spouse who inherits an IRA?

No. A surviving spouse is an eligible designated beneficiary and can roll the inherited IRA into their own IRA, avoiding the ten-year rule entirely.

What if I inherited the IRA before 2020?

The old stretch rules still apply if the original owner died before January 1, 2020. The SECURE Act changes are not retroactive.

Can I convert an inherited IRA to a Roth?

No. Only a surviving spouse who first rolls the inherited IRA into their own account can then do a Roth conversion.

Are there state income tax considerations on inherited IRA distributions?

Yes. Some states do not conform to federal treatment (Pennsylvania, for example, taxes inherited IRA distributions differently), so verify your state's rules.

What to Do Next

What decides this for you. Whether the person you inherited from had already begun taking required distributions. If they had, you owe annual distributions during the window as well as emptying the account by the end of year 10. If they had not, only the deadline applies.

Where it goes wrong. The rule sounds like permission to defer, and the final regulations issued in 2024 removed the ambiguity that let people wait. Two failures follow. Taking nothing until year 10 drops an entire inherited account into a single year of your own income, usually during your highest earning years, taxing at the top of your range what could have been spread across ten. And where annual distributions were required, missing them carries a penalty on the shortfall. The relief granted for the earlier confused years does not extend forward.

Worth a conversation if you inherited an account and are still working, your income moves year to year, or the account was split among several beneficiaries in different situations. The right schedule is built from your next decade of income, and year one is when it has to be set. Book a call.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Tax law changes frequently — verify current rules before acting. Consult with qualified professionals for guidance specific to your situation.