The 10-year rule creates a compressed window that can generate significant tax liability if not planned for Spread distributions strategically across all 10 years rather than waiting until the deadline Coordinate inherited IRA distributions with your overall tax bracket management strategy Consult a tax advisor to model the optimal distribution schedule for your specific situation

Curated by: Rubric Advisors

Retirement Planning

Inherited IRAs & the SECURE Act 10-Year Rule

The SECURE Act fundamentally changed inherited IRA rules, most non-spouse beneficiaries must now empty inherited accounts within 10 years, creating both a tax planning challenge and an opportunity for strategic distribution timing.

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The Old Rules vs the SECURE Act

Pre-SECURE Act: beneficiaries could 'stretch' inherited IRA distributions over their own life expectancy
The stretch allowed decades of continued tax-deferred growth, especially valuable for young beneficiaries
SECURE Act (2020): most non-spouse beneficiaries must empty the inherited account within 10 years of death
SECURE Act 2.0 (2022) and subsequent IRS guidance added annual RMD requirements within the 10-year window

Eligible Designated Beneficiaries

Five categories of beneficiaries can still use the stretch (life expectancy) method:
Surviving spouses, minor children of the decedent, disabled individuals, chronically ill individuals
Beneficiaries not more than 10 years younger than the decedent also qualify for the stretch
Minor children transition to the 10-year rule once they reach the age of majority (typically 18 or 21)

The 10-Year Rule Details

All assets must be distributed by December 31 of the 10th year following the year of death
If the original owner died after their required beginning date, annual RMDs are required within the 10 years
If the original owner died before their required beginning date, no annual RMDs, just the 10-year deadline
Roth inherited IRAs are subject to the 10-year rule but distributions are generally tax-free

Tax Planning Strategies

Spread distributions across all 10 years to avoid pushing large amounts into high tax brackets in year 10
Coordinate inherited IRA distributions with your other income, take more in low-income years
Consider accelerating distributions in years with capital losses, large deductions, or career gaps
Inherited Roth IRAs: delay distributions to maximize tax-free growth, then withdraw in year 10

Spouse Beneficiary Options

Surviving spouses have the most flexibility: treat as own IRA, remain as beneficiary, or use the 10-year rule
Treating as own IRA: subject to normal IRA rules including RMDs based on your own age
Remaining as beneficiary: can take distributions based on life expectancy, useful if under 59½
Younger surviving spouses may benefit from the beneficiary option to access funds penalty-free

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The Old Rules vs the SECURE Act

Pre-SECURE Act: beneficiaries could 'stretch' inherited IRA distributions over their own life expectancy
The stretch allowed decades of continued tax-deferred growth, especially valuable for young beneficiaries
SECURE Act (2020): most non-spouse beneficiaries must empty the inherited account within 10 years of death
SECURE Act 2.0 (2022) and subsequent IRS guidance added annual RMD requirements within the 10-year window

Eligible Designated Beneficiaries

Five categories of beneficiaries can still use the stretch (life expectancy) method:
Surviving spouses, minor children of the decedent, disabled individuals, chronically ill individuals
Beneficiaries not more than 10 years younger than the decedent also qualify for the stretch
Minor children transition to the 10-year rule once they reach the age of majority (typically 18 or 21)

The 10-Year Rule Details

All assets must be distributed by December 31 of the 10th year following the year of death
If the original owner died after their required beginning date, annual RMDs are required within the 10 years
If the original owner died before their required beginning date, no annual RMDs, just the 10-year deadline
Roth inherited IRAs are subject to the 10-year rule but distributions are generally tax-free

Tax Planning Strategies

Spread distributions across all 10 years to avoid pushing large amounts into high tax brackets in year 10
Coordinate inherited IRA distributions with your other income, take more in low-income years
Consider accelerating distributions in years with capital losses, large deductions, or career gaps
Inherited Roth IRAs: delay distributions to maximize tax-free growth, then withdraw in year 10

Spouse Beneficiary Options

Surviving spouses have the most flexibility: treat as own IRA, remain as beneficiary, or use the 10-year rule
Treating as own IRA: subject to normal IRA rules including RMDs based on your own age
Remaining as beneficiary: can take distributions based on life expectancy, useful if under 59½
Younger surviving spouses may benefit from the beneficiary option to access funds penalty-free

Key Takeaways

The 10-year rule creates a compressed window that can generate significant tax liability if not planned for
Spread distributions strategically across all 10 years rather than waiting until the deadline
Coordinate inherited IRA distributions with your overall tax bracket management strategy
Consult a tax advisor to model the optimal distribution schedule for your specific situation

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The information above is for educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. Any historical figures are for illustration only, and past performance does not guarantee future results. Tax laws, regulations, and contribution limits change frequently, the details here may become outdated. Individual circumstances vary. Consult a qualified financial advisor, CPA, or attorney for guidance specific to your situation. Rubric Advisors is registered with the California DFPI; registration does not imply a certain level of skill or training.

Inherited IRAs & the SECURE Act 10-Year Rule

The Old Rules vs the SECURE Act

Eligible Designated Beneficiaries

The 10-Year Rule Details

Tax Planning Strategies

Spouse Beneficiary Options

Key Takeaways

The Old Rules vs the SECURE Act

Eligible Designated Beneficiaries

The 10-Year Rule Details

Tax Planning Strategies

Spouse Beneficiary Options

Key Takeaways

Related Topics

Inherited IRA Tax Strategy

Beneficiary Designation Mistakes

401(k) Withdrawal Rules

Inherited IRAs & the SECURE Act 10-Year Rule

The Old Rules vs the SECURE Act

Eligible Designated Beneficiaries

The 10-Year Rule Details

Tax Planning Strategies

Spouse Beneficiary Options

Key Takeaways

The Old Rules vs the SECURE Act

Eligible Designated Beneficiaries

The 10-Year Rule Details

Tax Planning Strategies

Spouse Beneficiary Options

Key Takeaways

Related Topics

Inherited IRA Tax Strategy

Beneficiary Designation Mistakes

401(k) Withdrawal Rules