Inherited IRA RMD Rules — The 2025 Update (Finally Simplified)

If there's one topic that creates more confusion than almost anything else in the retirement world, it's Inherited IRA Required Minimum Distributions (RMDs) Full breakdown: RMD Mistakes & Fixes (inherited IRA RMD errors section).. Every week, someone asks:
"Do they need to take RMDs every year?"
"Does the 10-year rule apply here?"
"What about the 5-year rule?"
And my personal favorite: "Why does every article say something different?"

The 2025 landscape isn't introducing flashy brand-new rules. Instead, it continues clarifying what has already been in play under the SECURE Act — especially around annual RMD confusion. This blast breaks everything down simply and cleanly so you (and your clients) can understand exactly what applies, when it applies, and what to do next.

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Summary

Inherited IRA RMD rules depend on who the beneficiary is and whether the original owner had reached their Required Beginning Date (RBD). The 10-year rule still applies to most beneficiaries, and the 5-year rule remains a special exception. The biggest ongoing confusion is whether beneficiaries must take annual RMDs during the 10-year window — and we finally have clearer guidance in 2025 and heading into 2026.

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The Big Three Rules (2025 Edition)

1. The 10-Year Rule (Most Common Scenario)

For the majority of beneficiaries — anyone who isn't a "Eligible Designated Beneficiary" — the account must be fully distributed within 10 years.

But the key confusion is this:

Do they have to take annual RMDs during the 10 years?

It depends on whether the original account owner died before or after their Required Beginning Date.

• If the owner died before their RBD:

No annual RMDs required. Beneficiary can withdraw nothing until year 10 if they want. (I usually summarize it as: "Pure 10-year rule.")

• If the owner died after their RBD:

Yes, annual beneficiary RMDs are required in years 1–9 and the account must still be emptied by year 10. This is the rule that caused massive confusion, delays, and IRS "good faith" relief for years — but it remains the law.

2025 Update:
There is no new exemption or relief. Annual RMDs are expected to be taken if the owner died after their RBD.

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2. The 5-Year Rule (Rare, but important to know)

The 5-year rule applies only if:

• The owner died before their RBD,

and

• There was no designated beneficiary on record (often due to estate, trust, or form errors).

Under this rule, the entire account must be distributed by December 31 of the 5th year after death — with no annual RMDs in between.

This rule is becoming less common as more clients name proper beneficiaries, but it still surfaces whenever an estate accidentally becomes the beneficiary.

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3. Eligible Designated Beneficiaries (EDBs)

These special-status beneficiaries still get lifetime stretch RMDs:

• Surviving spouse

• Minor children of the decedent (until age 21)

• Disabled individuals

• Chronically ill individuals

• Beneficiaries within 10 years of the decedent's age

The stretch rules haven't changed for 2025, but it's still important to remember that:

• Once a minor child turns 21, they convert to the 10-year rule.

• Spouses have multiple options, including spousal rollover, taking the IRA as their own, and remaining as a beneficiary.

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Important things to know:

• The 10-year rule is still the default for most beneficiaries.

• The annual RMD requirement hinges completely on whether the decedent died before or after their Required Beginning Date (RBD).

• If the owner died post-RBD, the beneficiary has annual RMDs plus an empty-by-10 deadline.

• If the owner died pre-RBD, the beneficiary can use a clean "no RMD until year 10" approach.

• Eligible Designated Beneficiaries still use lifetime stretch, and the rules for minors remain unchanged.

• The 5-year rule applies only when there is no designated beneficiary.

• Trusts are still a case-by-case analysis; conduit trusts remain tied to designated beneficiary status.

• There is no new penalty relief for 2025 — beneficiaries must comply with the rules as written.

• Not every inherited IRA works the same. Your rules depend on your relationship to the original owner.

• Most people will fall under the 10-year rule, and that means the account must be emptied by year 10.

• Some years may require an annual withdrawal — others won't.

• You won't get penalized in most cases if you take the wrong amount once, but consistent mistakes can create real tax problems.

• If you are a spouse, you have multiple options — and choosing the wrong one can cost you.

• For large inherited IRAs, planning distributions over several years may lower your overall lifetime tax burden.

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