Since the SECURE Act took effect in 2020, most people who inherit an IRA from someone other than a spouse have lost the old “stretch IRA” option that let distributions spread across a beneficiary’s entire life expectancy. In its place is the 10-year rule — and thanks to IRS final regulations that took full effect in 2025, the rule turned out to have a second layer that catches a lot of beneficiaries off guard heading into 2026.
Two Different Versions of the 10-Year Rule
Whether you owe annual required distributions during years one through nine depends entirely on whether the original account owner had already reached their own required beginning date for RMDs at the time of death. If the original owner died before their RBD, the beneficiary can wait and take nothing until year 10, as long as the entire account is emptied by December 31 of that tenth year. If the original owner died on or after their RBD, the beneficiary must take annual RMDs in years 1 through 9, calculated using the beneficiary’s own life expectancy, in addition to fully emptying the account by year 10.
The Penalty for Missing a Required Annual Distribution
Skipping a required annual distribution in the years when one is owed can trigger an IRS excise tax of up to 25% of the amount that should have been withdrawn. That penalty can be reduced to 10% if the missed distribution is corrected within a limited correction window, but many beneficiaries didn’t realize they owed an annual RMD at all during 2021–2024, since the IRS repeatedly waived penalties for missed RMDs during that transition period while the final rules were being finalized. That waiver period is over.
Spouses Get Different, More Flexible Options
A surviving spouse inheriting an IRA isn’t bound by the 10-year rule at all in most cases — they can roll the inherited account into their own IRA and treat it as their own, or in some cases use a life-expectancy stretch, options that remain considerably more generous than what a non-spouse beneficiary such as an adult child gets.
Why This Trips Up Beneficiaries Who Assume They Can Wait
The most common mistake is treating the 10-year rule as a single deadline with total flexibility on timing, when in a large share of cases — specifically when the original owner had already started RMDs — there’s also a real annual obligation that starts immediately. Beneficiaries should confirm which version of the rule applies to their specific inherited account, ideally with the IRA custodian’s own records of the original owner’s RMD status, rather than assuming they have a full decade of complete discretion.
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Related reading: Required Minimum Distributions (RMDs) in 2026 and Net Unrealized Appreciation (NUA).
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