Most people who inherit a traditional IRA today have exactly ten years to drain it, not a lifetime. The Internal Revenue Service confirms that a non-spouse heir who does not qualify for one of a handful of exceptions must empty the account by December 31 of the year containing the tenth anniversary of the original owner’s death. That single deadline replaced a rule that once let heirs stretch withdrawals, and the taxes that came with them, across their own life expectancy. For heirs of large IRAs, the difference can mean paying tax on a fortune in a single decade instead of over thirty or forty years.
The SECURE Act Ended the Stretch IRA for Most Heirs
Congress rewrote the rules for inherited retirement accounts in the SECURE Act, which applies to owners who died in 2020 or later. Before that law, a non-spouse beneficiary could typically stretch required withdrawals over their own life expectancy, sometimes deferring most of the tax bill for decades. The new law replaced that option with the 10-year rule for anyone the IRS classifies as a “designated beneficiary” who is not also an “eligible designated beneficiary.” Adult children, most nieces and nephews, and unrelated heirs typically fall into that category, which now covers the majority of IRA beneficiaries nationwide.
The Internal Revenue Service’s guidance on inherited IRAs sets the deadline at December 31 of the year containing the 10th anniversary of the account owner’s death, with no exceptions for hardship or account size. A beneficiary who inherits a $400,000 IRA in 2026, for example, must have the entire balance withdrawn by the end of 2036, regardless of how the money is invested or how large the account grows in the meantime. Waiting until the final year to take it all at once is legal in some cases, but it can push an heir into a markedly higher tax bracket the year the money finally comes out.
The rule applies account by account, not estate by estate, so an heir who inherits IRAs from both parents in different years is tracking two separate 10-year clocks with two different final deadlines. Roth IRAs are not exempt from the countdown either, even though withdrawals from an inherited Roth are typically tax-free; the IRS still requires the account to be emptied within the same 10-year window, it simply does not tax the money coming out.
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Some Heirs Must Also Withdraw Money Every Year, Not Just by Year Ten
A separate wrinkle catches many heirs off guard: whether an annual withdrawal is required before the tenth year depends on whether the original owner had already started taking required minimum distributions. If the account owner died on or after their own required beginning date, generally age 73, the designated beneficiary must take a required minimum distribution every year from year one through year nine, calculated using the longer of the beneficiary’s own life expectancy or the deceased owner’s remaining life expectancy, in addition to emptying the account by year ten.
If the owner died before reaching that required beginning date, the calculus flips. The IRS’s Publication 590-B states plainly that no distribution is required for any year before the tenth year in that situation, meaning a beneficiary can technically let the account grow untouched for nearly a decade and withdraw everything at the deadline. That timing choice carries its own tax risk, since a lump withdrawal in a single year can be taxed at a much higher marginal rate than spreading it across nine years would have been.
The distinction confused enough beneficiaries and custodians in the years after the SECURE Act passed that the IRS issued Notice 2022-53, which waived penalties for 10-year-rule beneficiaries who missed the annual withdrawal in 2021 and 2022 while the final regulations were still being written. Missing a required annual distribution outside of that relief window triggers an excise tax of 25% of the amount that should have been withdrawn, reduced to 10% if the shortfall is corrected within two years.
The Heirs Who Can Still Stretch Payments Over a Lifetime
Not every heir is bound by the 10-year clock. The IRS defines an eligible designated beneficiary as the account owner’s surviving spouse, a minor child of the owner, a person who is disabled or chronically ill, or any other individual who is not more than 10 years younger than the owner. Those heirs may still stretch required withdrawals across their own life expectancy, the same option most beneficiaries lost when the SECURE Act took effect.
A surviving spouse has the most flexibility of any beneficiary: they can treat the inherited IRA as their own, roll it into a new account, or keep it as an inherited IRA and delay withdrawals until the year the deceased spouse would have turned 73. A minor child of the original owner can stretch payments over their own life expectancy only until they reach the age of majority; once that happens, the 10-year clock starts, and the account must be emptied within a decade of that birthday rather than the parent’s death.
The exceptions were narrowly written on purpose. Congress wanted the stretch option preserved for spouses, young children, and beneficiaries close in age or health circumstances to the original owner, while cutting it off for the broader pool of adult children and other heirs whose deferred withdrawals had been costing the Treasury tax revenue for decades. For everyone outside that narrow group, the 10-year deadline is fixed, and the only real decision left is how to time the withdrawals inside it.
This article was researched and drafted with the assistance of artificial intelligence.
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