What Is the 10-Year Rule?
The 10-year rule requires that most non-spouse beneficiaries who inherit an IRA or 401(k) after December 31, 2019 must distribute the entire account by December 31 of the tenth year following the original owner's death.
For example, if the account owner died in 2021, the inherited IRA must be fully distributed by December 31, 2031 — regardless of the beneficiary's age or the size of the account.
The 10-year rule replaced the "stretch IRA," which allowed beneficiaries to take distributions over their own lifetime. Congress eliminated the stretch for most beneficiaries as part of the SECURE Act of 2019, primarily as a revenue-raising measure.
The 10-year rule sets a deadline, not a schedule. Whether annual distributions are required within the 10 years depends on whether the original owner had started RMDs before dying — this is the most important and most misunderstood aspect of the rule.
Who Does the 10-Year Rule Apply To?
The 10-year rule applies to non-Eligible Designated Beneficiaries who inherit after December 31, 2019. This includes most adult children, grandchildren, siblings, and non-spouse partners.
The following beneficiaries are exempt from the 10-year rule and may use life expectancy distributions:
- Surviving spouses (who have additional options including treating as their own)
- Minor children of the account owner (until reaching age of majority, typically 21)
- Disabled individuals (per IRC §72(m)(7))
- Chronically ill individuals (per §7702B(c)(2))
- Individuals not more than 10 years younger than the original owner
Accounts inherited before January 1, 2020 are grandfathered under pre-SECURE Act rules and are not subject to the 10-year rule.
When Are Annual RMDs Required Within the 10-Year Period?
This is the question that created years of confusion — and what the IRS finally resolved in 2024 final regulations (effective 2025).
The answer hinges on one fact: had the original owner reached their Required Beginning Date (RBD) before dying?
| Owner Died | Annual RMDs in Years 1–9? | Year 10 Requirement |
|---|---|---|
| Before RBD — had not yet started RMDs | No — take on any schedule you choose | Full balance must be distributed |
| On/After RBD — had started or was required to start RMDs | Yes — annual minimums required using Table I | Full balance must be distributed |
When annual RMDs are required, they are calculated using the beneficiary's life expectancy from IRS Table I. The factor is set in the first distribution year (the year after the owner's death) and decremented by 1.0 each subsequent year — the same methodology used for stretch IRA beneficiaries.
SECURE 1.0 — Accounts Inherited 2020–2022
For accounts inherited between 2020 and 2022, the IRS initially provided relief by waiving the annual RMD penalty while it worked through the rulemaking process. Many beneficiaries — and their advisors — incorrectly concluded that no annual RMDs were ever required under the 10-year rule.
The IRS clarified in 2024 final regulations that annual RMDs were always the correct interpretation for post-RBD deaths, and the waivers were only penalty relief, not an exemption. Starting in 2025, annual RMDs are required for 2020–2022 inherited accounts where the owner died post-RBD.
If you inherited an IRA between 2020 and 2022 and the original owner had already started RMDs, you should have started taking annual distributions in 2025. Missing these distributions triggers the 25% excise tax (reducible to 10% with timely correction). Consult a tax professional if you are in this situation.
SECURE 2.0 Final Regulations — 2023 and Later
For accounts inherited in 2023 and later, the final regulations are fully in effect from day one. The rules are the same — 10-year deadline, with annual RMDs required in years 1–9 if the owner died post-RBD.
The key difference is there is no ambiguity or penalty waiver period. Beneficiaries of 2023+ inherited accounts must comply immediately.
The 10-Year Deadline — What Exactly Must Be Distributed?
The entire account balance must reach zero by December 31 of the tenth calendar year following the year of the owner's death. The year of death counts as year zero, and the clock starts January 1 of the following year.
Example: Owner dies March 15, 2022. Year 1 is 2023. Year 10 is 2032. Full distribution required by December 31, 2032.
There are no exceptions to the 10-year deadline based on account size, beneficiary age, or financial hardship. Failing to fully distribute by the deadline subjects the remaining balance to the 25% excise tax.
Distribution Strategy Within the 10-Year Period
Even when no annual minimum is required, beneficiaries have choices about how to spread distributions across the 10 years. Key considerations include:
- Tax bracket management — taking larger distributions in years with lower income and smaller distributions in high-income years can significantly reduce total tax paid
- Year 10 lump sum risk — waiting to distribute everything in year 10 can result in a massive taxable distribution that pushes you into the highest bracket
- Roth conversions — for traditional inherited IRAs, distributions in lower-bracket years can be paired with Roth conversions of the beneficiary's own accounts
- Investment considerations — the inherited IRA continues to grow tax-deferred during the 10-year period, so optimal investment allocation matters
Calculate Your 10-Year Rule RMD
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