Beneficiary Guide, Updated October 2026
Inherited IRA Rules: The 10-Year Rule, Annual RMDs, and Year-End Deadlines for Beneficiaries
Inherited IRA rules are the IRS requirements that tell a beneficiary how quickly they must withdraw money from a retirement account they inherit. The timeline depends on who you are: a surviving spouse, an eligible designated beneficiary, another individual, or an estate or trust. Many non-spouse heirs must empty the account within 10 years, and some must also take annual withdrawals.
An inheritance often comes with grief and a stack of paperwork. This guide sets out the rules in plain language so you can see where you stand before the December 31 deadline.
What Changed
Why Inherited IRA Rules Matter More in 2026
The SECURE Act ended the lifetime "stretch" for most non-spouse beneficiaries of owners who died after 2019 and put the 10-year rule in its place. Over the next few years, beneficiaries were unsure whether they also had to take yearly withdrawals inside that 10-year window. The IRS waived penalties for certain missed withdrawals while it finalized guidance.
That waiting period has ended. The final regulations, T.D. 10001, generally apply to required minimum distributions (RMDs) for calendar years beginning on or after January 1, 2025. IRS Notice 2024-35 gave relief for certain missed 2024 RMDs, but it did not move the 10-year deadline. For many heirs, 2026 is the second year in which annual withdrawals are expected.
Key Terms in Plain Language
- Required beginning date (RBD): The date the original owner had to start their own RMDs. For owners who reached 72 after 2022, the general applicable age is 73, according to IRS Publication 590-B.
- Designated beneficiary: An individual named on the account's beneficiary designation.
- Eligible designated beneficiary (EDB): A surviving spouse, the owner's minor child, a disabled or chronically ill individual, or someone no more than 10 years younger than the owner.
- Non-person beneficiary: An estate, a charity, or a trust that does not qualify for look-through treatment.
The Numbers to Know
Inherited IRA Rules at a Glance
10 Years
Payout window for most non-eligible individual beneficiaries
5 Years
General window for non-person beneficiaries when the owner died before the RBD
25%
Excise tax on an RMD shortfall, which may drop to 10% if corrected on time
Dec 31
Usual deadline for each year's inherited IRA RMD
Sources: IRS Publication 590-B; T.D. 10001 (IRB 2024-33). Figures as of October 2026. The IRS may waive the excise tax in qualifying circumstances.
Decision Table
Inherited IRA Rules by Beneficiary Type
Start by finding your beneficiary type. Your payout window, and whether you owe a withdrawal every year, depend mostly on two things: who you are and whether the original owner died before or after their required beginning date. This table summarizes general rules for owners who died in 2020 or later.
| Beneficiary Type | Payout Window | Annual RMDs? | Notes |
|---|---|---|---|
| Surviving spouse | Flexible. Can treat the IRA as their own, roll it over, or stay a beneficiary. | Depends on the option chosen. A spouse who treats the IRA as their own generally follows their own RMD schedule. | Your age, your income needs, and early-withdrawal rules can affect which option fits. |
| Eligible designated beneficiary (minor child, disabled or chronically ill individual, or someone no more than 10 years younger) | Generally life-expectancy payments (the "stretch"). In some cases the 10-year rule applies instead. | Generally yes, under life-expectancy payouts. | A minor child's EDB status generally ends at majority. The remaining balance then falls under a 10-year period. |
| Other designated beneficiary (for example, an adult child or grandchild) | 10-year rule. The account must be emptied by December 31 of the year containing the 10th anniversary of the owner's death. | Yes in years 1 to 9 if the owner died on or after the RBD. No if the owner died before the RBD. | This group most often owes a year-end RMD under the final regulations. |
| Non-person (estate, charity, or non-qualifying trust) | If the owner died before the RBD, generally the 5-year rule. If after, generally payouts over the owner's remaining life expectancy. | No annual RMDs under the 5-year rule. Yes when payouts follow the owner's life expectancy. | A trust that meets "see-through" requirements may be treated differently. Review the trust document with your attorney. |
Summary based on IRS Publication 590-B and the IRS release on final RMD regulations (July 18, 2024), as of October 2026. Exceptions apply. Your facts, the custodian's records, and the account documents determine your actual requirements.
The 10-Year Rule Explained
Before or After the Required Beginning Date: Why Timing Matters
Under the 10-year rule, the most important question is whether the original owner had already started their own RMDs. The answer decides whether you have one deadline at the end of 10 years or a withdrawal due every year along the way.
Owner Died Before the RBD
No withdrawal is required in years 1 to 9. The whole balance must be out by the end of year 10. This leaves room to plan, but waiting until the final year could push a large amount of taxable income into a single tax year.
Owner Died On or After the RBD
A withdrawal is generally due in each of years 1 to 9, and the balance must be emptied by the end of year 10. Spreading withdrawals across years may help manage tax brackets, though the right pace depends on your income and other goals.
Here is an example of the math. If the original owner died in 2020, the 10-year deadline generally falls on December 31, 2030. Inherited accounts often arrive alongside other changes in a family's finances, so we usually review them as part of broader retirement income strategies rather than as a separate decision.
Before December 31, 2026
Year-End Checklist for Inherited IRA Beneficiaries
Custodians can get busy in December, so it may help to start these steps in October or November. For a broader list of year-end moves, see our year-end tax planning checklist.
Avoid These Missteps
Common Inherited IRA Mistakes
Most inherited IRA problems are avoidable. They usually come from moving too fast in the first weeks or from assuming the old stretch rules still apply. These mistakes can be expensive and, in some cases, cannot be undone.
Cashing Out Before Getting Advice
A lump-sum withdrawal from an inherited traditional IRA is generally taxed as ordinary income in the year you take it, which could raise your tax bracket.
Using a 60-Day Rollover as a Non-Spouse
Non-spouse beneficiaries generally cannot roll inherited funds into their own IRA. A trustee-to-trustee transfer into a properly titled inherited IRA is generally the permitted route.
Assuming the Penalty Waivers Still Apply
The IRS relief covered certain missed RMDs for 2021 through 2024. Under the final regulations, annual RMDs that apply for 2025 and later are generally expected to be taken on time.
How We Help
One Plan Across Generations
An inherited IRA connects your parents' planning with your own. At The Stellarix Group, we treat it as part of your whole financial plan, alongside your investments, taxes, insurance, and estate documents. We do not handle it as a one-time transaction.
Withdrawal Planning
Our CFP® professionals, including Financial Planning Manager Ryan Griffin, CFP®, and Haley Gray, CFP®, AIF®, can help you plan withdrawals that fit your income needs and your 10-year deadline. Tax results vary from person to person, so we coordinate with your CPA.
Special Needs Beneficiaries
Disabled and chronically ill beneficiaries may qualify for life-expectancy payouts. Melissa Lang, CLU, ChSNC, CLTC, works with families on special needs planning that may involve trusts, which need to be coordinated with benefit eligibility and with your attorney.
Legacy Coordination
We review beneficiary designations as part of multi-generational wealth planning and estate planning strategies in Colorado, working with your legal advisors. We do not provide legal advice.
We are based in Denver and serve clients in all 50 states. Our advisory and insurance services are offered through MML Investors Services, LLC. If you are planning for your own heirs, our page for retirees in Denver covers that side of the plan.
Frequently Asked Questions
Inherited IRA Questions Answered
Can a Surviving Spouse Roll an Inherited IRA Into Their Own IRA?
Yes, generally. A surviving spouse may treat the inherited IRA as their own, roll eligible distributions into their own IRA, or remain a beneficiary, according to IRS Publication 590-B. A younger spouse who needs money before age 59 and a half may sometimes prefer to stay a beneficiary, because withdrawals from an IRA treated as their own could face early-withdrawal rules.
Do Inherited Roth IRAs Have to Follow the 10-Year Rule?
Generally yes, for non-eligible beneficiaries. Roth IRA owners have no lifetime RMDs, but their beneficiaries still must follow the post-death distribution rules. Because the owner is generally treated as having died before the RBD, many non-eligible beneficiaries face only the 10-year deadline and no annual RMDs. Withdrawals may be tax-free if the Roth five-year holding period has been met.
What Happens When a Trust Is the IRA Beneficiary?
It depends on how the trust is written. A trust that meets "see-through" requirements may be able to use the payout rules of its individual beneficiaries. Other trusts are treated as non-person beneficiaries and generally fall under the 5-year rule or the owner's remaining life expectancy. Trust drafting is legal work, so we coordinate with your estate attorney.
Do Beneficiaries Pay Taxes on an Inherited IRA?
Usually, when they withdraw from a traditional inherited IRA. Those withdrawals are generally taxed as ordinary income, and the custodian reports them on Form 1099-R. Publication 590-B notes that distributions to beneficiaries after the owner's death are generally exempt from the additional 10% early-withdrawal tax. Your actual tax depends on your bracket and your state.
What If I Missed an Inherited IRA RMD?
Take the missed amount as soon as practical and talk with your CPA. The excise tax is generally 25% of the shortfall. It may be reduced to 10% if you correct the shortfall within the correction window, and the IRS may waive it for reasonable cause in qualifying circumstances.
One Star to Guide the Way
Get Clarity on Your Inherited IRA Before Year-End
Inherited IRA rules can feel like a maze, especially when you are grieving. Our credentialed team can review your beneficiary type, your deadlines, and your withdrawal options with you, and we coordinate with your CPA and attorney. Every situation is different, and outcomes depend on your circumstances.
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