What Are The Required Minimum Distribution Rules For Inherited IRAs

Most non-spouse beneficiaries must empty the inherited IRA within 10 years of the original owner's death, with annual withdrawals required if the owner was already taking RMDs. Spouses and certain eligible beneficiaries can stretch distributions over their own life expectancy.

The 10-year rule and inherited IRA RMD requirements

The SECURE Act, passed in December 2019, eliminated the lifetime stretch for most non-spouse heirs of inherited retirement accounts. Under the new law, if you inherit an IRA from someone who died after December 31, 2019, you must withdraw the entire balance by December 31 of the tenth year following the original owner's death. This is the "10-year rule." For example, if your aunt died in 2024, you must empty her traditional IRA by December 31, 2034. No annual withdrawal is required in years 1 through 9 if the owner had not yet begun taking RMDs. You could technically take nothing until the final year, though that creates a large tax bill.

However, the IRS clarified in July 2024 that if the original owner had already begun RMDs before death, you must take annual withdrawals in each of those ten years. This applies even if you plan to empty the account by year 10. For instance, if your father passed away at age 75 and was already taking RMDs from his traditional IRA, you must calculate and withdraw an amount each year. The calculation uses your own life expectancy under the IRS Single Life Table, not the original owner's remaining schedule. The first annual RMD is due by December 31 of the year after his death. Subsequent ones follow each year thereafter.

Who still qualifies for the lifetime stretch

Congress created five categories of "eligible designated beneficiaries" who can still stretch payouts over their own life expectancy, bypassing the decade-long limit entirely. These are: (1) the surviving spouse, who can treat the IRA as their own or roll it into their own IRA; (2) minor children of the decedent, until they reach age 21, at which point the 10-year rule kicks in; (3) disabled individuals as defined by IRS rules, meaning they cannot engage in substantial gainful activity due to a physical or mental impairment; (4) chronically ill individuals who are certified by a licensed physician as unable to perform at least two activities of daily living for at least 90 days; and (5) individuals who are within 10 years of age of the decedent, such as a sibling or close friend who is younger but not by more than a decade. For these recipients, the annual RMD is calculated using the beneficiary's own life expectancy. This typically results in smaller withdrawals and more tax-deferred growth over time.

Spouses have the most flexibility. They can treat the inherited IRA as their own, roll it into their existing IRA, or remain a beneficiary and take RMDs based on their own life expectancy. A spouse who is under age 59½ can avoid the 10% early withdrawal penalty by using the inherited IRA provisions, even if they take withdrawals before that age. The other four categories must follow the decade-long limit after their eligibility ends. For minor children, that means once they turn 21, they have 10 years to empty the account.

The costly mistake of missing an RMD

The IRS penalty for failing to take a required minimum withdrawal from an inherited IRA is 25% of the amount you should have withdrawn. If you correct the mistake quickly, by withdrawing the missed amount and filing Form 5329 with the IRS, the penalty drops to 10%. This has been a major source of unexpected tax bills since the SECURE Act passed. Many heirs assumed that the decade-long limit meant no annual payouts were required at all. They took nothing in years 1 through 9, only to face penalties for each missed year. For example, if your mother died in 2021 and she was already taking RMDs, you should have taken a withdrawal in 2022, 2023, and 2024. If you skipped all three, you owe penalties on each amount, plus the withdrawals themselves, which are taxed as ordinary income. The IRS has been lenient with waivers for reasonable errors, but relying on that leniency is risky. You must file Form 5329 and attach a statement explaining the error and steps you took to correct it.

The penalty also applies to the 10-year rule itself. If you inherit an IRA and fail to empty it by December 31 of the tenth year, the remaining balance is subject to a 50% excise tax. That is because it is treated as a total withdrawal you failed to take. That is on top of the income tax you will owe when you finally withdraw it. To avoid this, mark the deadline on your calendar and set annual reminders to calculate your RMDs. Use the IRS Uniform Lifetime Table or the Single Life Table, depending on your relationship to the decedent.

Frequently asked questions

Can I take a lump-sum withdrawal from an inherited IRA without penalty?

Yes, you can withdraw the entire balance at once without an early withdrawal penalty, but the full amount is taxable as ordinary income in the year you take it. This could push you into a higher tax bracket. It is often smarter to spread the payouts over the ten-year window.

What happens if the original owner died before their RMD start date?

If the owner died before April 1 of the year after turning 73 (or 72 if they turned that age before 2023), the 10-year rule applies with no annual RMDs required for non-eligible heirs. You can take withdrawals at any time within the ten years, but the entire account must be empty by the deadline.

Do I have to take RMDs from an inherited Roth IRA?

No, Roth IRAs are exempt from RMDs during the original owner's lifetime. Recipients of inherited Roth IRAs are also not required to take annual withdrawals. However, you must still empty the account within 10 years if you are a non-spouse heir. All withdrawals are tax-free because contributions were made with after-tax dollars.

Can I disclaim an inherited IRA if I don't want it?

Yes, you can disclaim the inheritance, and the account passes to the next beneficiary named on the beneficiary form. The disclaimer must be made in writing within nine months of the owner's death. You must not have taken any withdrawals from the account before disclaiming.

Most non-spouse heirs must empty the inherited IRA within 10 years of the original owner's death. Annual withdrawals are required if the owner was already taking RMDs. Spouses and certain eligible recipients can stretch payouts over their own life expectancy. If you inherited an IRA recently, the rules hinge on two factors: who you are to the original owner and whether the owner had already reached the age where required minimum distributions (RMDs) began. The IRS has tightened the timeline for most beneficiaries, but exceptions remain for spouses and a few specific groups.

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