What are the main changes to inherited IRA rules under the SECURE Act?

The SECURE Act of 2019 eliminated the "stretch IRA" option for most non-spouse beneficiaries, replacing it with the 10-year rule. This means most non-spouse individual beneficiaries must now fully distribute the inherited IRA by the end of the tenth calendar year following the original owner's death, rather than stretching distributions over their lifetime. Certain "Eligible Designated Beneficiaries" (EDBs) are exempt from this rule.

Who qualifies as an Eligible Designated Beneficiary (EDB) for an inherited IRA?

As of 2026, EDBs include surviving spouses, minor children of the original account owner (until age 21), disabled individuals, chronically ill individuals, and individuals not more than 10 years younger than the original account owner. These beneficiaries can still stretch distributions over their life expectancy.

What happens if I don't take distributions from an inherited IRA within the 10-year rule?

If you are subject to the 10-year rule and fail to fully distribute the inherited IRA by December 31st of the tenth calendar year following the owner's death, the undistributed amount is subject to a 25% excise tax penalty. This penalty can be reduced to 10% if the failure is corrected promptly.

Can a surviving spouse roll an inherited IRA into their own IRA?

Yes, a surviving spouse has the unique option to roll over an inherited IRA into their own IRA. This allows them to treat the account as their own, delay RMDs until their own Required Beginning Date (age 73 as of 2026), and make future contributions. This is generally the most advantageous option for spouses.

Are inherited Roth IRA distributions taxable?

Qualified distributions from an inherited Roth IRA are tax-free. For distributions to be qualified, the Roth IRA must have been established and funded for at least five years before the first distribution. Even with the 10-year rule for non-spouse beneficiaries, the tax-free nature of these withdrawals makes them very beneficial.

What is the difference between the 5-year rule and the 10-year rule for inherited IRAs?

The 5-year rule applies to non-designated beneficiaries (like estates or non-qualifying trusts) if the original owner died before their Required Beginning Date. The entire IRA must be distributed by the end of the fifth year. The 10-year rule applies to most non-spouse individual beneficiaries (Designated Beneficiaries) and requires the IRA to be fully distributed by the end of the tenth year.

Do I have to take Required Minimum Distributions (RMDs) from an inherited IRA under the 10-year rule?

Generally, no. For most non-spouse designated beneficiaries subject to the 10-year rule, there are no annual RMDs within the 10-year period. The only requirement is that the entire account balance must be distributed by the deadline. However, if the original owner died on or after their RBD, the beneficiary must take the RMD for the year of death.

Inherited IRA Rules 2026: Beneficiary Guide | One Percent…