Heirs who inherited retirement accounts and skipped annual withdrawals for the past four years without penalty now face a hard deadline. The IRS waived excise taxes on missed required minimum distributions from inherited IRAs for 2021 through 2024, giving non-spouse beneficiaries subject to the 10-year drawdown rule extra time to adjust. That relief window has closed. Final regulations will govern RMD calculations for calendar years beginning on or after January 1, 2025, and beneficiaries who fail to withdraw the correct amount this year risk a 25 percent excise tax on the shortfall.
Why full RMD enforcement hits inherited-IRA holders in 2025
The SECURE Act of 2019 replaced the old “stretch IRA” strategy with a 10-year depletion rule for most non-spouse beneficiaries. Instead of taking small, lifetime-based withdrawals, many heirs now must empty inherited accounts by the end of the 10th year after the original owner’s death. However, the law’s text and early guidance left a gray area: Did heirs also have to take annual RMDs within that 10-year window when the decedent had already started their own RMDs?
The IRS acknowledged widespread confusion and, in a series of notices beginning with Notice 2022-53, said it would not treat certain non-spouse heirs as having failed to take the correct RMD in 2021 and 2022. Subsequent guidance extended that same relief through 2024 for beneficiaries subject to the 10-year rule who inherited from someone who died after their required beginning date. During this period, the agency effectively paused enforcement of the excise tax for these missed annual withdrawals while it worked on final regulations.
The practical effect was straightforward: beneficiaries could leave money in inherited accounts, let balances grow tax-deferred, and avoid the excise tax that normally applies to missed withdrawals. That deferral is now over. The return of enforcement means every affected beneficiary must calculate and take an RMD for 2025 or pay a steep penalty. For someone who inherited a large traditional IRA and has not taken a single distribution since the account owner’s death, the catch-up math could be significant, particularly because the 10-year clock kept running during the waiver years.
The hypothesis that full enforcement will produce a measurable spike in 2025 distributions rests on simple logic: beneficiaries who deferred for four years must now act. Future IRS Statistics of Income tables on IRA withdrawals by age and account type should reflect that surge, though those datasets typically appear with a multi-year lag.
IRS notices and Publication 590-B confirm the 2025 start date
The clearest official signal came through Internal Revenue Bulletin 2024-19, which published Notice 2024-35. That notice states that the final regulations Treasury and the IRS intend to issue will apply for determining RMDs for calendar years beginning on or after January 1, 2025. In other words, 2025 is the first year in which the finalized rules will govern inherited-IRA RMD calculations and related excise-tax exposure.
Separately, the 2024/2025 edition of Publication 590-B, the IRS guide for IRA distributions, includes a cross-reference to Notice 2024-35 and reiterates that the agency will not assert an excise tax in 2024 for missed RMDs if the beneficiary meets the specified conditions. By implication, 2025 carries no such protection. The two documents together draw a clear line: relief behind, enforcement ahead. Beneficiaries who have relied on the waiver years to postpone decisions should treat 2025 as the point at which inaction becomes far more expensive.
Open questions about enforcement scope and beneficiary preparedness
Even with a firm start date, several practical questions remain. One is how aggressively the IRS will enforce the 25 percent excise tax, which can be reduced to 10 percent if the shortfall is corrected in a timely manner. Historically, the agency has allowed taxpayers to request relief by filing Form 5329 and attaching a reasonable-cause explanation, but the volume of inherited-IRA cases in 2025 could test both administrative capacity and consistency.
Another concern is beneficiary awareness. Many non-spouse heirs are casual investors who may not follow regulatory developments closely. Some will have inherited accounts through workplace plans and then rolled them to IRAs without fully understanding the 10-year rule or the interaction with annual RMDs. The IRS offers general guidance for beneficiaries of retirement plans, but translating those rules into precise dollar amounts still requires careful calculation or professional help.
Technology may partially bridge this gap. Beneficiaries who work with tax professionals or use software that integrates with the IRS’s online tools may be better positioned to avoid missteps. The agency’s online account system allows taxpayers to view certain information about their filings and balances, and the separate business online account platform supports entities that administer plans or estates. While these tools do not currently compute inherited-IRA RMDs automatically, they reflect a broader push toward digital interactions that could eventually make compliance easier.
For now, the burden remains on beneficiaries and their advisors to interpret the final regulations once issued, determine whether annual RMDs are required in addition to the 10-year cleanout, and document any corrective steps if prior years’ distributions fall short. With the waiver period over, overlooking those details in 2025 is no longer a harmless delay; it is a potential 25 percent mistake.
