Request Your Sample Report
The stretch IRA is mostly gone. Under the SECURE Act of 2019, most non-spouse beneficiaries who inherit a traditional or Roth IRA from an owner who died after 2019 must empty the account within 10 years of the owner’s death . The 2024 IRS final regulations (T.D. 10001) confirmed that if the original owner died after their required beginning date, the beneficiary must also take annual RMDs during years 1 through 9 of the 10-year window and fully empty the account by the end of year 10 . A narrow group of Eligible Designated Beneficiaries still gets something closer to the old stretch treatment, but they’re the exception now, not the rule.
When the SECURE Act passed in December 2019, the provision that killed the stretch IRA got less attention than the RMD age change, but it ended up being the bigger deal for legacy planning . For twenty-plus years before that, a non-spouse beneficiary could stretch distributions from an inherited IRA over their own life expectancy, which for a young beneficiary meant decades of tax-deferred growth and small annual RMDs. That planning framework is over for most beneficiaries.
I get more questions on the 10-year rule than on any other retirement tax topic, and most of them come from advisors whose clients inherited an IRA in the last few years and don’t know what they’re supposed to do with it. The 2024 final regs added a layer on top of the statute that a lot of people missed. Let me walk through the rules as they stand in 2026, who still qualifies for stretch-like treatment, and what the planning moves look like for IRA owners who don’t want to leave their heirs with a ten-year tax bomb.
The pre-SECURE stretch world
Before 2020, a non-spouse beneficiary who inherited an IRA had to start taking Required Minimum Distributions the year after the owner’s death, calculated using the beneficiary’s own single life expectancy factor from IRS tables . For a 40-year-old beneficiary inheriting a $500,000 IRA, that meant small annual RMDs in the first years, with most of the balance continuing to grow tax-deferred for decades. That was the stretch.
The economics of the stretch were significant. A young beneficiary who managed the inherited account well could compound the tax-deferred balance for 30 or 40 years and pay taxes on distributions gradually across their own working and retirement years. Wealthy families used the stretch as a core piece of multi-generational tax planning. Congress looked at the Joint Committee on Taxation scoring, decided the stretch was a revenue cost they didn’t want to keep funding, and wrote SECURE 2019 to close it for most beneficiaries .
The five Eligible Designated Beneficiary categories
The SECURE Act didn’t eliminate stretch treatment for everyone. Section 401(a)(9)(E) as amended by SECURE 2019 created a category called Eligible Designated Beneficiaries, and members of that group still get life expectancy treatment on inherited IRAs . There are exactly five categories:
- Surviving spouse. A surviving spouse has always had the most flexibility on an inherited IRA. They can roll the account into their own IRA, elect to be treated as the owner, or remain a beneficiary and take distributions over their life expectancy. SECURE 2.0 added the option for a surviving spouse to elect to be treated as the deceased spouse for RMD purposes in some cases, which can delay distributions further if the deceased spouse was younger .
- Minor child of the account owner. A child of the deceased IRA owner who has not reached the age of majority can take life expectancy distributions until they reach the age of majority, at which point the 10-year rule kicks in. The 2024 final regs set the age of majority at 21 for this purpose, regardless of state law differences.
- Disabled individuals. A beneficiary who meets the disability definition under IRC Section 72(m)(7) can take life expectancy distributions for their lifetime [1]. This definition is stricter than the general Social Security disability standard in some applications, so documentation matters.
- Chronically ill individuals. A beneficiary who is certified as chronically ill under IRC Section 7702B(c)(2) also gets life expectancy treatment [1]. The certification requirement is specific and typically requires a licensed healthcare practitioner’s attestation.
- Beneficiaries not more than 10 years younger than the deceased owner. A sibling, partner, or friend who is within 10 years of the owner’s age (younger or older) can take life expectancy distributions for their own life . This category catches situations like an older sibling leaving an IRA to a younger sibling, or an older partner leaving an IRA to a surviving partner.
Everyone who doesn’t fit one of these five categories is called a Designated Beneficiary and is subject to the 10-year rule. That includes adult children of the account owner, grandchildren, nieces and nephews, and most other individual heirs. It’s a big group.
The 10-year rule mechanics and the 2024 final regs
The 10-year rule as written in SECURE 2019 requires a Designated Beneficiary to empty the inherited IRA by December 31 of the year containing the 10th anniversary of the original owner’s death . For an owner who dies in 2026, the beneficiary has until December 31, 2036 to empty the account. Within that window, the question has always been whether the beneficiary has to take any distributions in years 1 through 9, or whether they can wait until the end and pull everything out in year 10.
The IRS took four years to answer that question definitively. Proposed regulations in 2022 said that if the original owner died after their Required Beginning Date, the beneficiary had to take annual RMDs in years 1 through 9 and also empty the account by year 10. That position caught a lot of practitioners by surprise, and the IRS waived penalties for missed inherited IRA RMDs for tax years 2021 through 2024 under IRS Notice 2022-53 and follow-up notices while the rules were being finalized .
The final regulations, issued as T.D. 10001 in July 2024, confirmed the two-track approach [2]:
- If the original IRA owner died before their Required Beginning Date (that is, before the year they would have started RMDs), the Designated Beneficiary has no annual RMD requirement in years 1 through 9. They can take distributions in any pattern they want, as long as the account is empty by December 31 of year 10.
- If the original IRA owner died on or after their Required Beginning Date, the Designated Beneficiary must take annual RMDs in years 1 through 9 calculated using their single life expectancy, and the account must still be empty by December 31 of year 10.
The practical effect is that beneficiaries who inherit from an owner already in RMD mode can’t just sit on the account and wait until year 10 to take everything. They have to take something each year. The penalties for missing an inherited IRA RMD are 25% of the missed amount under SECURE 2.0, reduced to 10% if corrected within the two-year correction window ].
Roth conversions and life insurance planning done during the IRA owner’s lifetime can eliminate much of this problem for beneficiaries. Running Roth Done Right and Legacy Done Right together, against a defined Heirs Tax Rate, lets an advisor show a client exactly how repositioning today changes what heirs keep. The window most advisors miss is that Roth conversions are not available on a non-spousal inherited IRA, so this planning has to happen while the original owner is still alive, not after.
Roth IRA inheritance under the 10-year rule
Roth IRAs are subject to the 10-year rule the same way traditional IRAs are, but the mechanics work differently because Roth distributions to a beneficiary are generally tax-free under current rules . A Roth IRA owner never has RMDs during their lifetime, which means by definition the Roth owner has no Required Beginning Date, and inherited Roth beneficiaries don’t have annual RMD requirements in years 1 through 9. They just have to empty the account by December 31 of year 10.
That’s a significant planning advantage for Roth legacy. The beneficiary can let the inherited Roth grow tax-free for nearly ten full years and then take the full balance tax-free at the end. Traditional IRA beneficiaries don’t get that option, both because they face annual RMDs in most cases and because every distribution is taxable as ordinary income. The after-tax legacy value of a Roth IRA under the 10-year rule is much higher than the after-tax legacy value of a traditional IRA of the same pre-tax balance, and that math is driving more Roth conversion planning than it was before SECURE 2019.
Planning moves for IRA owners who don’t want to leave a tax bomb
The 10-year rule changed the shape of retirement tax planning for savers who want to leave meaningful IRA balances to their kids. Here’s what I run for clients in that situation.
- Roth conversions during the owner’s lifetime. Converting traditional IRA balances to Roth at the owner’s marginal rate, spread across tax years and withdrawal brackets, shrinks the traditional IRA balance that will eventually hit the 10-year rule and builds a Roth balance that passes more efficiently to heirs. See our [Roth Done Right software] for advisors running conversion scenarios.
- Qualified Charitable Distributions. An IRA owner age 70.5 or older can send up to $108,000 per person in 2025 (inflation indexed) directly from an IRA to a qualified charity as a QCD, which satisfies RMDs without creating taxable income . For charitably inclined clients, QCDs shrink the IRA balance inside the owner’s lifetime without generating tax.
- Charitable Remainder Trusts as a stretch replacement. A CRT named as IRA beneficiary can receive the IRA balance at death, distribute income to named beneficiaries for a term of years or for life, and then pass the remainder to a charitable beneficiary. Done correctly, a CRT creates a stretch-like income stream for heirs and also delivers a charitable legacy. The trust rules are specific and a tax attorney needs to set them up.
- Beneficiary coordination across accounts. Owners with multiple IRAs and qualified accounts can name Eligible Designated Beneficiaries on the accounts where they qualify and non-EDB beneficiaries on the accounts that will hit the 10-year rule anyway. Thoughtful beneficiary coordination can meaningfully improve after-tax legacy outcomes.
- Life insurance as a tax-free wealth transfer layer alongside the IRA plan. Some clients fund life insurance with IRA distributions during their lifetime and shift the legacy dollars into a death benefit that passes income-tax-free under Section 101 (IRC Section 101(a); Section 7702 separately sets out the requirements a contract must meet to qualify as life insurance for this tax treatment), reducing the amount that has to flow through the 10-year rule. This works for the right client and fails for the wrong one, so advisors have to run the numbers.
Penalties for missed inherited IRA RMDs
The IRS Notice 2022-53 waiver covered 2021 through 2024 for beneficiaries who were subject to the annual RMD requirement under the 2022 proposed regs but didn’t take distributions during the uncertainty period . Starting with the 2025 tax year, the waiver is over. Beneficiaries in year 2 or later of the 10-year window who fail to take an annual RMD face the 25% penalty under SECURE 2.0, or 10% if they correct the missed distribution within the two-year correction window . Advisors working with inherited IRA clients should be running the annual RMD calculation now and documenting it carefully.
For a client in their late 60s with a $1.5 million traditional IRA, a blended conversion strategy often delivers the biggest after-tax legacy lift: converting a portion of assets to Roth while directing another portion into life insurance. That combination diversifies the legacy assets, giving heirs a death benefit alongside the income flexibility of the Roth assets, and it’s usually where advisors find the most traction once a client sees the comparison side by side.
Free Advisor Training
Turn Roth Conversations Into Revenue
Watch this complimentary training to learn how leading advisors use retirement tax concerns to create urgency, open Roth conversion conversations, and uncover valuable new planning opportunities.
Where the stretch conversation goes from here
Congress could revisit the 10-year rule in future legislation, and we’ve seen bills introduced that would adjust the Eligible Designated Beneficiary categories or soften the distribution timing, but nothing has moved through both chambers yet . Advisors should plan around the rules as they exist in 2026 and treat any future legislative relief as a bonus, not as a planning assumption. For our full take on legislative risk and how to plan around policy uncertainty, read our [legislative risk retirement guide]. For a deeper look at the 2026 tax changes affecting retirement planning, see our [tax changes retirement 2026 overview].
The rules under the SECURE Act and the 2024 final regs are technical, and the penalties for getting them wrong are real. If you’re an advisor running an inherited IRA case for a client in 2026, walk through the decedent’s date of death, their Required Beginning Date status, the beneficiary’s EDB category (if any), and the year-by-year distribution plan in writing. The math isn’t optional and the penalty math isn’t forgiving. To run client scenarios inside software built for this work,
This article does not constitute tax, legal, or financial planning advice. Stonewood Financial is not a securities-licensed firm. IRA beneficiary planning and inherited IRA distribution decisions should be made in consultation with a qualified tax advisor or attorney based on your specific situation.
Frequently Asked Questions
What is the 10-year rule for inherited IRAs under the SECURE Act?
The 10-year rule requires most non-spouse beneficiaries who inherit a traditional or Roth IRA from an owner who died after 2019 to empty the inherited account by December 31 of the year containing the 10th anniversary of the owner’s death [1]. Beneficiaries who inherit from an owner who died after the owner’s Required Beginning Date must also take annual RMDs in years 1 through 9 under the 2024 IRS final regs [2].
Who still qualifies for stretch treatment on an inherited IRA?
Five categories of Eligible Designated Beneficiaries still qualify for life expectancy distributions: a surviving spouse, a minor child of the deceased owner, a disabled individual, a chronically ill individual, and any beneficiary who is not more than 10 years younger than the deceased owner [1][4]. Everyone else is subject to the 10-year rule.
Does the 10-year rule apply to Roth IRAs?
Yes. Inherited Roth IRAs are subject to the 10-year rule, but because a Roth owner has no lifetime Required Beginning Date, inherited Roth beneficiaries are not required to take annual RMDs in years 1 through 9. They can let the Roth grow tax-free for nearly ten years and take the full balance out at the end of year 10 [1][2].
What happens if I miss an inherited IRA RMD?
Under SECURE 2.0, the penalty for a missed RMD is 25% of the amount that should have been distributed, reduced to 10% if the miss is corrected within the two-year correction window [5][7]. The IRS waived penalties for missed inherited IRA RMDs for tax years 2021 through 2024 under Notice 2022-53 and follow-up notices, but the waiver ended for 2025 [6].
When does the 10-year window start?
The 10-year window starts on the date of death of the original IRA owner and ends on December 31 of the calendar year containing the 10th anniversary of the death [1]. For an owner who dies in 2026, the beneficiary has until December 31, 2036 to empty the account.
Can a Roth conversion help with the 10-year rule?
Yes. Lifetime Roth conversions reduce the traditional IRA balance that will eventually be subject to the 10-year rule and ordinary income tax for beneficiaries, and build up a Roth balance that passes more efficiently because there are no annual RMDs during years 1 through 9 and distributions are generally tax-free under current rules [2][3].
Sources and References
Sources are numbered to match the inline [N] markers in the body above.
[1] SECURE Act of 2019, Public Law 116-94, Section 401, modifications to required minimum distribution rules for designated beneficiaries. https://www.congress.gov/bill/116th-congress/house-bill/1994
[2] Internal Revenue Service, Final Regulations T.D. 10001, Required Minimum Distributions, July 2024, 10-year rule and annual RMD requirements for designated beneficiaries. https://www.irs.gov/pub/irs-drop/td-10001.pdf
[3] Internal Revenue Service, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), inherited IRA rules and examples. https://www.irs.gov/publications/p590b
[4] Internal Revenue Code Section 401(a)(9), required minimum distribution rules for qualified plans and IRAs. https://www.law.cornell.edu/uscode/text/26/401
[5] SECURE 2.0 Act of 2022, Public Law 117-328, Section 302 RMD penalty reduction, Section 327 surviving spouse elections. https://www.congress.gov/bill/117th-congress/house-bill/2617
[6] Internal Revenue Service, Notice 2022-53, relief for certain beneficiaries from the 10-year rule annual distribution requirements during 2021 and 2022, extended through 2024 by subsequent notices. https://www.irs.gov/pub/irs-drop/n-22-53.pdf
[7] Internal Revenue Service, Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), QCD rules and 2026 inflation-indexed limits. https://www.irs.gov/publications/p590a
[8] Joint Committee on Taxation, technical explanations of SECURE Act and SECURE 2.0 provisions. https://www.jct.gov/
About the Author
Strategy expertise and training that actually moves the needle. Neil sees the big opportunities coming - and develops tools to let you take advantage of them.
