The Setting Every Community Up for Retirement Enhancement Act — the SECURE Act, signed December 20, 2019, and effective for deaths on or after January 1, 2020 — eliminated the single most valuable feature of inherited IRAs for most beneficiaries: the ability to "stretch" distributions over the beneficiary's own life expectancy. Before 2020, a 40-year-old child inheriting a $500,000 IRA from a parent could take minimum distributions over an additional 43.6 years of life expectancy, deferring taxes on the bulk of the account for decades. After 2020, that same beneficiary must distribute the entire account within 10 years of the parent's death, accelerating the tax bill and frequently pushing the beneficiary into a higher marginal bracket. The change affects an estimated $12 trillion in retirement assets that will pass to non-spouse beneficiaries over the next two decades, and the IRS's final regulations issued in July 2024 added a further complication: if the original owner died on or after their Required Beginning Date, most non-EDB beneficiaries must take annual distributions in years 1 through 9 and empty the account in year 10. Getting this wrong triggers a 25 percent excise tax on the shortfall, cut to 10 percent if corrected within the two-year cure window under SECURE 2.0. The rules are now complex enough that even sophisticated beneficiaries routinely miss required distributions in the years the IRS says they are owed.
The end of the stretch IRA
The stretch IRA was never a specific account type — it was a strategy made possible by the pre-2020 minimum distribution rules for beneficiaries. Under the old rule, codified at former IRC § 401(a)(9)(B)(iii), a designated beneficiary of a retirement account could compute required minimum distributions over the beneficiary's single life expectancy using the Single Life Table in IRS Publication 590-B. A 50-year-old beneficiary had a life expectancy factor of 34.2, meaning the first-year RMD on a $500,000 inherited IRA was approximately $14,620, and the account could continue growing tax-deferred for three decades or more. The stretch was particularly powerful for grandchildren named as beneficiaries, who could extend distributions over 60 or 70 years.
The SECURE Act replaced the stretch with a 10-year distribution rule for most beneficiaries, codified at IRC § 401(a)(9)(H). The change was projected to raise $15.7 billion in federal revenue over ten years, and the revenue estimate assumed that beneficiaries would distribute roughly evenly across the 10-year window — pushing each year's distribution into ordinary income. The reality has been messier, because beneficiaries who backload distributions into year 10 produce a larger lump-sum tax event than the IRS projected, and beneficiaries who accelerated distributions before the IRS clarified the annual RMD requirement (in proposed regulations issued February 2022) sometimes over-withdrew. The stretch survives only for the narrow categories of beneficiaries Congress carved out as "Eligible Designated Beneficiaries" — the five classes described below.
The 10-year rule mechanics
Under IRC § 401(a)(9)(H)(ii), a designated beneficiary who is not an Eligible Designated Beneficiary must distribute the entire inherited IRA by December 31 of the year containing the 10th anniversary of the original owner's death. If the original owner died on March 15, 2021, the 10-year window closes on December 31, 2031. There are no required distributions within the 10-year window for beneficiaries of owners who died before their Required Beginning Date — the beneficiary can withdraw any amount at any time, or nothing at all, as long as the account is empty by the end of year 10.
For deaths on or after the owner's Required Beginning Date, the final regulations issued by the IRS in July 2024 (T.D. 10005) impose an additional requirement: the beneficiary must take annual distributions in years 1 through 9 using the beneficiary's single life expectancy, with the account fully distributed in year 10. The Required Beginning Date is April 1 of the year following the year the owner reached RMD age — 70½ under pre-SECURE law, 72 under SECURE, 73 under SECURE 2.0, and 75 beginning in 2033. An owner who died in 2023 at age 76 had passed their RBD, and their non-EDB beneficiaries are subject to both the annual distribution requirement and the 10-year emptying rule. An owner who died in 2022 at age 71 — before reaching RMD age 73 under SECURE 2.0 — was pre-RBD, and beneficiaries are subject only to the 10-year emptying rule.
The annual distribution in years 1 through 9 is calculated using the Single Life Table factor for the beneficiary's age in the year after the owner's death, reduced by one in each subsequent year. A 55-year-old beneficiary uses a factor of 29.6 in year 1, 28.6 in year 2, and so on. The annual distribution is not optional — missing it triggers the 25 percent excise tax under IRC § 4974, reduced to 10 percent if corrected within the two-year window under SECURE 2.0. The year 10 distribution is the entire remaining balance, regardless of size, and is taxed as ordinary income to the beneficiary. Strategic beneficiaries often accelerate distributions in low-income years (such as the year of a sabbatical or before Social Security begins) and defer in high-income years, but the annual RMD floor in years 1 through 9 limits the deferral strategy.
Eligible Designated Beneficiaries: the five classes
The SECURE Act carved out five categories of Eligible Designated Beneficiaries (EDBs) who are exempt from the 10-year rule and may continue to use the pre-2020 life expectancy stretch. The five classes, codified at IRC § 401(a)(9)(E)(ii), are: (1) the surviving spouse of the IRA owner; (2) a disabled individual; (3) a chronically ill individual; (4) an individual who is not more than 10 years younger than the IRA owner; and (5) the minor child of the IRA owner. Each class has its own technical definition and its own distribution rules.
| EDB class | Stretch allowed? | Distribution basis | Notes |
|---|---|---|---|
| Surviving spouse | Yes, with election options | Spouse's own life expectancy, or roll to own IRA | Multiple elections; see spousal options section |
| Disabled individual | Yes | Beneficiary's life expectancy | Disability must meet IRC § 72(m)(7) test |
| Chronically ill individual | Yes | Beneficiary's life expectancy | Must meet IRC § 401(a)(9)(E)(ii)(III) test |
| Not more than 10 years younger | Yes | Beneficiary's life expectancy | Includes older beneficiaries and same-age peers |
| Minor child of IRA owner | Yes — until age of majority | Child's life expectancy until majority, then 10-year rule | Age of majority is generally 18, sometimes 21 by state |
The disability test under IRC § 72(m)(7) requires that the individual be "unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration." The standard is essentially the same as the Social Security disability standard, and the IRS in the final regulations clarified that disability must be documented but does not need to predate the IRA owner's death — a beneficiary who becomes disabled after inheriting can still qualify. The chronic illness test under IRC § 401(a)(9)(E)(ii)(III) is satisfied if the beneficiary is certified by a licensed healthcare practitioner as unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing, continence) for at least 90 days, or as requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
The "not more than 10 years younger" class captures siblings, friends, and unmarried partners who are within a decade of the owner's age. A 75-year-old who names her 68-year-old sister as beneficiary qualifies — the sister is 7 years younger and falls within the 10-year window, so she can stretch distributions over her own life expectancy. The same 75-year-old who names her 50-year-old niece does not qualify — the niece is 25 years younger and is subject to the 10-year rule. The minor child class is the narrowest: it covers only the IRA owner's own children, not grandchildren, nieces, nephews, or other minors. The child can stretch distributions over their own life expectancy until they reach the age of majority under state law (typically 18, sometimes 21), at which point the 10-year clock starts running and the account must be emptied by December 31 of the year containing the 10th anniversary of the child's reaching majority.
The Required Beginning Date problem
The most consequential clarification in the IRS final regulations of July 2024 was the treatment of beneficiaries of owners who died on or after their Required Beginning Date. The proposed regulations issued in February 2022 first signaled that such beneficiaries must take annual RMDs in years 1 through 9 of the 10-year window — not merely empty the account by the end of year 10. This interpretation surprised many practitioners who had read the SECURE Act as requiring only a year 10 emptying, and it produced a wave of missed RMDs in 2021 and 2022 that the IRS subsequently waived (Notice 2022-53, then Notice 2023-54, extended the waiver through 2024). The final regulations confirmed the annual RMD requirement, but the IRS again waived the penalty for missed annual RMDs in years 1 through 9 for 2024 in Notice 2024-35, recognizing that beneficiaries had not had clear guidance until the final regulations were issued.
Beginning in 2025, beneficiaries of owners who died on or after RBD must take annual RMDs in years 1 through 9 of the 10-year window, calculated using the Single Life Table factor for the beneficiary's age in the year after the owner's death, reduced by one in each subsequent year (the "ghost life expectancy" rule, because the original owner's life expectancy is effectively frozen at the date of death). The annual RMD is in addition to, not in lieu of, the year 10 emptying requirement. A beneficiary who misses the annual RMD owes the 25 percent excise tax on the shortfall, reducible to 10 percent under the SECURE 2.0 correction window by filing Form 5329 with a brief explanation.
The RBD determination itself depends on the year the original owner reached RMD age. For deaths before 2020, the RBD was April 1 of the year after the owner turned 70½. For deaths in 2020 through 2022, the RBD was April 1 of the year after the owner turned 72 (under SECURE). For deaths in 2023 and later, the RBD is April 1 of the year after the owner turned 73 (under SECURE 2.0). Beginning in 2033, the RMD age moves to 75, and the RBD moves accordingly. An owner who died in 2024 at age 74 had passed RBD; an owner who died in 2024 at age 71 had not. The determination matters because it controls whether the beneficiary owes annual RMDs in years 1 through 9 or only the year 10 emptying.
Spousal options: four elections
A surviving spouse who inherits an IRA has four elections, each with different tax and distribution consequences. The first is to roll the inherited IRA into the spouse's own IRA, treating the assets as the spouse's own. This election, available only to a surviving spouse, gives the spouse the longest possible deferral — RMDs do not begin until the spouse reaches RMD age (73 under current law), and the spouse can use the Uniform Lifetime Table rather than the Single Life Table to compute RMDs. The rollover must be a trustee-to-trustee transfer; a 60-day rollover is permitted but risky if the spouse is under 59½, because withdrawals before 59½ from the spouse's own IRA trigger the 10 percent early distribution penalty.
The second election is to "treat the IRA as the spouse's own" without an actual rollover — by, for example, redesignating the IRA from "John Doe deceased, for the benefit of Mary Doe" to "Mary Doe IRA." This has the same effect as the rollover and is governed by Treasury Regulation § 1.408-8, Q-5. The third election is to remain a beneficiary and open an inherited IRA titled in the deceased spouse's name for the benefit of the surviving spouse. This election is useful when the surviving spouse is under 59½ and may need to take distributions before age 59½ — distributions from an inherited IRA are not subject to the 10 percent early distribution penalty, regardless of the spouse's age. The surviving spouse can later convert the inherited IRA to her own IRA at any time, typically after reaching 59½. The fourth election is to disclaim the IRA, in which case it passes to the contingent beneficiary as though the surviving spouse had predeceased the owner. A disclaimer must be made within nine months of the owner's death and before the spouse has accepted any benefit from the IRA.
The spouse also has a unique election added by SECURE 2.0: the surviving spouse can elect to be treated as the deceased spouse for RMD purposes, allowing the spouse to use the deceased spouse's age (rather than the spouse's own age) to compute RMDs if the deceased spouse was younger. This election, available for deaths after December 31, 2023, benefits spouses who inherit from a younger spouse — for example, a 75-year-old wife who inherits from her 70-year-old husband can elect to use the husband's age, deferring RMDs until the husband would have reached 73. The election is made by the surviving spouse on the RMD calculation, and the IRS issued proposed regulations in 2024 providing procedural guidance.
Case studies
A 52-year-old woman inherited a $500,000 traditional IRA from her father, who died in 2024 at age 76 — after his Required Beginning Date. She is not an Eligible Designated Beneficiary (she is 24 years younger than her father), so the 10-year rule applies, and because her father died after RBD, she must take annual RMDs in years 1 through 9 plus a full distribution in year 10. Her year 1 RMD, using the Single Life Table factor of 31.4 for a 53-year-old in the year after her father's death, is $500,000 ÷ 31.4 = $15,924. Assuming 6 percent annual growth and continued RMDs in years 2 through 9, the account balance at the end of year 10 will be approximately $460,000, all of which must be distributed in that year. The year 10 distribution alone, added to her other income of $90,000, would push her into the 32 percent marginal bracket — producing roughly $147,000 in federal tax on the year 10 distribution, plus state income tax. A more tax-efficient strategy would be to distribute $50,000 per year in years 1 through 10, keeping each year's distribution in the 24 percent bracket and producing roughly $120,000 in total federal tax — a $27,000 saving over the backloaded strategy.
A 68-year-old widow inherited a $750,000 traditional IRA from her husband, who died in 2024 at age 71 — before his Required Beginning Date under SECURE 2.0 (which is 73). She elected to roll the inherited IRA into her own IRA, treating the assets as her own. The rollover gives her complete flexibility: she can take withdrawals at any time without penalty (she is over 59½), she is not required to begin RMDs until she reaches age 73 in 2029, and she can use the Uniform Lifetime Table (which assumes a beneficiary 10 years younger) to compute her RMDs rather than the less favorable Single Life Table. If she instead remained a beneficiary and used the Single Life Table, her first RMD at age 73 would use a factor of 26.5 rather than the Uniform Lifetime Table's 27.4 — a $5,830 difference on a $750,000 balance. The rollover also gives her the ability to do Roth conversions during the five-year window before her own RMDs begin, potentially converting $150,000 per year from age 68 to 72 and reducing her future RMD tax burden. The downside of the rollover is that she cannot undo it, and if she needs penalty-free access to the funds before 59½ (not applicable here, but relevant for younger spouses), the inherited IRA form would have been preferable.
A grandfather died in 2024 at age 80 and named his 12-year-old granddaughter as the beneficiary of his $300,000 IRA, intending to provide for her college education. The granddaughter is not the IRA owner's child — she is his grandchild — and the minor-child EDB class is limited to the owner's own children. The granddaughter is therefore a "designated beneficiary" subject to the 10-year rule, not an EDB entitled to stretch distributions to age of majority. The IRA must be fully distributed by December 31, 2034, when the granddaughter is 22. If the grandfather had named the granddaughter's parent (his adult daughter) as the beneficiary, with the understanding that the parent would use the funds for the granddaughter's benefit, the parent — as a non-EDB — would still be subject to the 10-year rule. A trust for the granddaughter's benefit would not improve the result, because a trust is generally treated as a non-designated beneficiary (no life expectancy) unless it qualifies as a see-through trust, in which case the oldest trust beneficiary's life expectancy controls — and under the 10-year rule for non-EDBs. The lesson is that the stretch IRA is essentially unavailable for grandchildren under current law, and alternative vehicles (529 plans, custodial accounts, life insurance) are usually more effective for grandchild bequests.
Common mistakes
- Missing annual RMDs in years 1 through 9 — Beneficiaries of owners who died on or after RBD must take annual RMDs using the Single Life Table, but many beneficiaries (and many custodians) read the SECURE Act as requiring only the year 10 emptying. The IRS has waived the penalty for years through 2024, but beginning in 2025 the 25 percent excise tax applies. Confirm with the custodian that annual RMDs are being computed and distributed, and file Form 5329 if a year is missed.
- Treating all trusts as designated beneficiaries — A trust can qualify as a "see-through trust" for purposes of determining the applicable distribution period, but only if it meets four requirements: it is valid under state law, it is irrevocable at the owner's death, the beneficiaries are identifiable, and the trust documentation is provided to the plan administrator by October 31 of the year after death. A trust that fails any of these is treated as a non-designated beneficiary, requiring distribution within 5 years (if the owner died before RBD) or under the owner's remaining life expectancy (if the owner died after RBD) — both of which are dramatically worse than the 10-year rule.
- Naming the estate as beneficiary — An estate is not a designated beneficiary and has no life expectancy. If the owner died before RBD, the IRA must be distributed within 5 years; if after RBD, distributions must continue over the owner's remaining life expectancy (calculated as if the owner were still alive). Either result is worse than naming an individual beneficiary subject to the 10-year rule, and the estate distribution also exposes the IRA to the estate's creditors and probate costs.
- Failing to establish the inherited IRA with the correct title — An inherited IRA must be titled in the form "John Doe (deceased) IRA, for the benefit of Mary Doe." If the beneficiary simply transfers the funds to her own IRA, the IRS treats it as a taxable distribution rather than a rollover, with potentially catastrophic tax consequences. Surviving spouses have the unique ability to roll over or treat as their own; non-spouse beneficiaries do not.
- Not coordinating with the beneficiary's own tax bracket — A beneficiary in the 24 percent bracket who accelerates $100,000 of inherited IRA distributions in a single year pushes the distribution into the 32 percent bracket, paying $8,000 more in federal tax than if the distributions were spread across multiple years. Conversely, a beneficiary in a low-income year (a sabbatical, the year between jobs, the year before Social Security begins) should accelerate distributions to take advantage of the lower bracket.
- Forgetting that Roth IRAs inherited are still subject to the 10-year rule — A non-spouse beneficiary who inherits a Roth IRA is subject to the same 10-year rule (and the same annual RMD requirement if the owner died after RBD, though Roth IRA owners have no RBD during life). The distributions are tax-free, but the timing still matters for the beneficiary's overall tax planning, and the year 10 emptying is mandatory.
- Disclaiming too late — A disclaimer must be made within 9 months of the original owner's death, and the disclaimant cannot have accepted any benefit from the IRA. A beneficiary who takes one distribution and then realizes the IRA would be better suited for the contingent beneficiary has lost the ability to disclaim. Coordinate any disclaimer decision with the entire estate plan, including the contingent beneficiary designation and any estate tax considerations.
When to consult a professional
Inherited IRAs involve an intersection of tax law, estate law, and financial planning that few beneficiaries can navigate alone, and the 10-year rule has made the consequences of error substantially larger. A consultation with a CPA or tax attorney in the year of the original owner's death — ideally within the first 90 days — pays for itself by ensuring that the inherited IRA is established with the correct title, that the beneficiary's annual RMD obligation is correctly determined, and that a multi-year distribution strategy is built around the beneficiary's own tax bracket. The cost of a thorough consultation ranges from $500 to $2,000 depending on complexity, against which the cost of a single missed RMD penalty on a $500,000 IRA can be $5,000 or more.
Several situations warrant a more comprehensive engagement. Estates large enough to file Form 706 (over the federal estate tax exemption, $13.99 million per individual in 2025) require coordination between the estate tax return and the IRA's "income in respect of a decedent" deduction, which can offset some of the income tax burden on inherited IRA distributions. Trusts named as IRA beneficiaries require analysis of the see-through trust rules and the oldest beneficiary rule, and the trust document itself may need amendment to accommodate the SECURE Act changes. Beneficiaries who are disabled or chronically ill should work with a special needs planning attorney to ensure that inherited IRA distributions do not disqualify the beneficiary from means-tested government benefits, which typically requires a first-party special needs trust structured as a see-through trust. For projecting required distributions on an inherited IRA under current rules, see our RMD calculator, and for the broader retirement income strategy, see our RMD rules for 2026 and our Roth conversion strategy guide.
Frequently asked questions
It depends on whether your mother had reached her Required Beginning Date before she died. If she was born before July 1, 1949, her RBD was April 1 of the year after she turned 70½, and if she died on or after that date, you must take annual RMDs in years 1 through 9 of the 10-year window — beginning in 2025, because the IRS waived the requirement for 2021 through 2024. If she was born after July 1, 1949 and died before reaching RMD age 72, you are subject only to the year 10 emptying requirement and can distribute any amount (or nothing) in years 1 through 9. The IRS's final regulations issued in July 2024 control, and your IRA custodian should be able to confirm whether annual RMDs are required in your case.
In most cases, yes. The rollover gives you the longest possible deferral — RMDs do not begin until you reach age 73, and you can use the more favorable Uniform Lifetime Table to compute them. The rollover also gives you the ability to do Roth conversions during the deferral window. The main exception is if you are under 59½ and may need to take distributions before age 59½, in which case remaining as a beneficiary lets you take penalty-free distributions from the inherited IRA. You can convert the inherited IRA to your own IRA at any time, so this is not an irrevocable decision. A second exception arises under the SECURE 2.0 election to be treated as the deceased spouse for RMD purposes, which is useful if your spouse was younger than you and you want to defer RMDs until the spouse would have reached 73.
No. The minor-child EDB class is limited to the IRA owner's own children — not grandchildren, nieces, nephews, or other minors. Your grandson is a non-EDB and is subject to the 10-year rule: the IRA must be fully distributed by December 31 of the year containing the 10th anniversary of your death, regardless of his age. If you want to provide for your grandson's education or long-term benefit, a 529 plan, a custodial account under UTMA, or a life insurance policy held in an irrevocable trust will typically produce a better outcome than an inherited IRA under the current rules.
Take the missed distribution immediately, then file Form 5329 with your individual income tax return for the year of the shortfall. Check the box indicating that you are requesting a waiver of the excise tax under SECURE 2.0's correction window, attach a brief explanation of the error and the corrective steps taken, and pay the 10 percent reduced penalty (rather than the 25 percent standard rate) if the correction is within the two-year window. The IRS routinely grants relief for reasonable error — custodian error, illness, or confusion over the SECURE Act rules — but you must file the form to claim the relief. Do not wait for the IRS to assess the penalty; self-correction within the window is the cleanest path.
For more, see our guide to RMD rules for 2026 and our Roth conversion strategy guide, or use our RMD calculator to project required distributions.
Last reviewed June 29, 2026. This article is informational and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation.