Inherited IRA 10-Year Rule in 2026: Annual RMDs Are No Longer Optional

If you inherited a traditional IRA after December 31, 2019, you have been living under a cloud of ambiguity for five years. The SECURE Act imposed a 10-year depletion window on most non-spouse beneficiaries, but it left a critical question unanswered: do you owe an annual minimum distribution within those ten years, or can you simply let the account grow and sweep it all in year ten?

The IRS answered that question definitively with final regulations in July 2024 (TD 10001). The IRS penalty relief that excused missed annual distributions through 2024 then expired with Notice 2024-35. As of 2025 — and through 2026 and beyond — there is no new waiver in effect. If you owe annual distributions and haven't been taking them, the excise tax is live.

Here is what the rule actually requires.

Who Is Subject to the 10-Year Rule

The 10-year rule applies to non-eligible designated beneficiaries (non-EDBs) who inherit an IRA from an owner who died on or after January 1, 2020. Non-EDBs are what most people are: adult children, grandchildren, siblings, or other beneficiaries who don't meet any of the exemption categories below.

Eligible designated beneficiaries (EDBs) are exempt from the 10-year rule entirely and can instead stretch distributions over their own life expectancy:

Eligible Designated Beneficiary	Rule
Surviving spouse	May treat the IRA as their own; no 10-year rule applies
Minor child of the original owner	Stretch rules apply until age of majority, then 10-year rule kicks in
Disabled individual (IRC § 72(m)(7))	Stretch rules apply
Chronically ill individual	Stretch rules apply
Person not more than 10 years younger than the owner	Stretch rules apply

If none of those categories describe you, you are a non-EDB subject to the 10-year depletion rule. The account must be empty by December 31 of the tenth year following the owner's death.

Note: Accounts inherited before January 1, 2020 follow the old "stretch IRA" rules and are not affected by the SECURE Act changes described here.

The Annual RMD Split: Pre-RBD vs. Post-RBD Deaths

The 10-year rule says you must deplete the account within ten years. What it does not say is whether you owe anything in years one through nine. The IRS's 2024 final regulations created two entirely different regimes depending on when the original owner died relative to their Required Beginning Date (RBD).

An owner's RBD is April 1 of the year after they reached their RMD starting age — now age 73 for those born between 1951 and 1959, or age 75 for those born in 1960 or later. (See the RMD age guide for the full SECURE 2.0 timeline.)

When the owner died	Annual RMD requirement in years 1–9
Before their RBD (hadn't yet started RMDs)	No annual RMDs required. You can take $0 in years 1–9 and distribute the entire balance in year 10
On or after their RBD (had already started RMDs)	Annual RMDs are required in years 1–9, calculated on your own life expectancy. Full depletion still required by end of year 10

This distinction matters enormously. An adult child who inherits from a 65-year-old parent (before their RBD) has total flexibility: nine years of tax deferral followed by one taxable year, if they choose. An adult child who inherits from a 78-year-old parent (after their RBD) owes an annual distribution every year of the window, with no discretion.

How the Annual RMD Is Calculated

For post-RBD inheritances, the annual distribution amount is calculated using the IRS Single Life Expectancy Table (Publication 590-B, Table I), based on the beneficiary's age at the end of the year of the owner's death. That initial factor is then reduced by 1.0 for each subsequent year.

To make this concrete, consider a hypothetical scenario. A beneficiary named Marcus inherits a $600,000 traditional IRA in 2023 from his mother, who died at age 79 — well past her Required Beginning Date. Marcus is 50 at the end of 2023. Under Table I, a 50-year-old has a life expectancy factor of 34.2.

Year	Marcus's age	Factor	Assumed Dec 31 balance	Annual RMD
2023	50	34.2	$600,000	$17,544
2024	51	33.2	$612,000	$18,434
2025	52	32.2	$604,000	$18,758
2026	53	31.2	$595,000	$19,071
2027	54	30.2	$586,000	$19,404

The RMD grows modestly each year as the factor shrinks, even if the account balance holds roughly steady. In the final year (year 10, 2032), Marcus must distribute whatever remains — potentially $400,000–$500,000 in a single calendar year if he only took the minimums. That's a significant year-10 tax spike to plan around.

The IRS waived penalties for 2021, 2022, 2023, and 2024 while the annual-distribution question was unsettled. For Marcus's example, that means the 2023 and 2024 RMDs were penalty-free to skip — but he could not ignore 2025 and beyond.

The Penalty Math

Missing a required annual distribution within the 10-year window triggers a 25% excise tax on the shortfall amount (reduced from 50% by SECURE 2.0). If you correct the error within two years by taking the missed distribution, the penalty drops to 10%. You must also file IRS Form 5329 to report the missed RMD and request a waiver if one applies.

A 25% penalty on a $19,000 missed distribution is roughly $4,750. That's not catastrophic — but it's money going to the IRS rather than you, on top of ordinary income tax on the distribution when you eventually take it.

The Real Problem: Year-Ten Tax Concentration

For pre-RBD inheritances where no annual distributions are required, the biggest danger is ignoring the account until year 10 and then realizing you owe income tax on the entire remaining balance in one calendar year.

Consider a hypothetical beneficiary who inherits $250,000 in 2022 from an account owner who had not yet started RMDs. She takes nothing for nine years. Assuming 6% annual growth, the account reaches approximately $422,000 by the end of 2031. She must distribute the full $422,000 by December 31, 2032. Added to any other income she earns that year — her salary, Social Security, dividends — that single distribution could easily push her into the 32% or 35% bracket.

The smarter approach: treat the 10-year window as a tax-spreading opportunity. Taking $42,000 per year for 10 years keeps the annual addition to income manageable and often lands in the 12% or 22% bracket. The total tax paid is nearly identical in dollar terms, but at rates that are typically lower than a concentrated year-10 hit.

One wrinkle: inherited IRA assets cannot be "Roth-converted." Whatever comes out of an inherited traditional IRA is taxable as ordinary income; you cannot move it to a Roth without paying ordinary income tax first. What you can do is coordinate inherited IRA distributions with Roth conversions of your own traditional IRA in lower-income years — keeping total taxable income below the 22–24% bracket boundary. The Roth conversion calculator lets you model how much conversion room you have in a given year after accounting for other income sources.

If you're also modeling when your overall retirement savings last, the when-can-I-retire calculator incorporates inherited IRA assets into the full drawdown picture — including how a large inherited account affects your first-RMD year income and IRMAA exposure.

A Quick Reference by Inheritance Scenario

Inherited post-2019, owner died before RBD: Full flexibility for 9 years; plan now for year 10 tax concentration. Spreading voluntarily outperforms waiting.

Inherited post-2019, owner died after RBD: Annual RMDs are mandatory starting with the year of inheritance (or the year following — confirm with your custodian). The 2025 and 2026 distributions are not waived.

Inherited pre-2020 (stretch IRA rules apply): Not subject to the 10-year rule. Life expectancy withdrawals continue under the old rules.

Surviving spouse: More options than any other beneficiary — you can roll the inherited IRA into your own, delaying RMDs to your own starting age, or keep it as an inherited IRA and tap it without the 10% early-withdrawal penalty if you're under 59½.

The core interaction to sort out — what the owner's RBD was, and therefore whether you're in the annual-RMD camp — is a one-time clarification that your IRA custodian or a fee-only CPA can confirm. Granary models your inherited and personal IRA accounts together in a single drawdown projection, so the inherited account's forced income integrates with your other planning rather than getting managed in isolation.

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This post is planning education, not tax advice. Inherited IRA rules interact with beneficiary relationship, account type, the original owner's RMD history, and your state tax situation in ways that benefit from a conversation with a fee-only CPA or financial planner before you act.