If there's one retirement rule that consistently confuses both clients and financial professionals, it's this one: the 10-year rule for inherited IRAs under the SECURE Act and SECURE Act 2.0.
Every time I explain it, I see the same reaction:
"Wait… so I DO have to take annual RMDs? Or I DON'T? And what if I'm a spouse? What if the original owner died after their RBD? What happens if I inherit from a younger sibling? What if I'm inheriting an inherited IRA? Does the clock restart?"
Let's break it down.
1. Who does the 10 year rule apply to?
"The 10-year rule applies to most non-spouse beneficiaries who inherited an IRA from someone who passed away on or after January 1, 2020."
The SECURE Act created two categories of beneficiaries:
A) Eligible Designated Beneficiaries (EDBs)
These beneficiaries are NOT subject to the 10-year rule.
EDBs include:
- surviving spouses
- minor children of the account owner (until age of majority)
- beneficiaries who are disabled
- beneficiaries who are chronically ill
- beneficiaries who are less than 10 years younger than the decedent
B) Non-Eligible Designated Beneficiaries (NEDBs)
Everyone else.
This includes:
- adult children
- grandchildren
- siblings
- friends
- anyone through a properly named beneficiary form who doesn't meet EDB status
So the first misunderstanding is simple:
Not everyone is under the 10-year rule.
Only NEDBs.
2. What the 10-Year Rule Actually Means
This part is shockingly misunderstood:
You must fully distribute the inherited IRA by December 31 of the 10th year following the original owner's death.
That's it.
That's the rule.
But — and this is the confusing part — depending on when the original owner died, you might also need annual RMDs during years 1–9.
This is where the chaos comes from.
3. The Big Question: "Do I need annual RMDs under the 10-year rule?"
It depends on ONE thing:
Did the original owner pass before or after their Required Beginning Date (RBD)?
The RBD is April 1 of the year after turning RMD age (currently age 73).
This gives us two paths:
Scenario A — Owner died before RBD → No annual RMDs
This is the simplest version of the 10-year rule:
- No annual RMDs
- No distribution schedule
- You can take nothing until year 10 if you want
- You just have to empty the account by 12/31 of year 10
Scenario B — Owner died after RBD → Annual RMDs are required
This is the part that shocked the entire industry in 2022.
If the original owner had already started RMDs:
- Annual RMDs continue based on the beneficiary's life expectancy table
- AND the account must still be emptied by the end of year 10
- RMDs in years 1–9
- Full liquidation by year 10
That's incorrect for post-RBD deaths.
4. So How Do You Know Which One Applies?
Ask one question:
Did the decedent already reach RMD age?
- If NO → no annual RMDs + distribute by year 10
- If YES → annual RMDs + empty by year 10
5. Spouses Are Not Under the 10-Year Rule (Unless They Choose To Be)
This is another giant misunderstanding.
Spouses have multiple options:
Option 1 — Spousal Rollover (most common)
The account becomes their own.
They follow their own RMD age and rules.
No 10-year rule.
Option 2 — Remain a Beneficiary
Useful if spouse is younger than 59½ and wants penalty-free access.
Even here:
- They may use stretch RMDs, not the 10-year rule.
Option 3 — Elect the 10-Year Rule
This is rarely beneficial, but spouses can choose it.
Most people don't — it's usually a worse tax outcome.
6. Minor Children Get the Stretch — Then the 10-Year Rule Begins
This confuses people constantly.
Minor children of the decedent get:
- stretch RMDs until they reach age of majority (21 in most SECURE Act interpretations)
- THEN the 10-year clock starts
- 11 years of stretch
- then 10 more years under the 10-year rule
That's how Congress wrote it.
7. "What if the beneficiary is close in age?"
If the beneficiary is less than 10 years younger, they're an EDB.
Example:
- Your sister is 3 years younger
Most people do NOT know this.
8. "What if there are multiple beneficiaries?"
The rules follow the youngest beneficiary unless the account is split by 12/31 of the year after death.
If not split:
- The group may be forced into the 10-year rule
- Annual RMDs may be required
- Each inherits their portion separately
- Each follows their own rules
9. Year 10 Must Still Empty the Account (Even with Annual RMDs)
This is another major misunderstanding:
Annual RMDs do NOT replace the requirement to empty the account by year 10.
Both rules apply simultaneously.
Example:
- Owner died after RBD
- Beneficiary takes annual RMDs for 9 years
- A large balance remains
- They must empty everything in year 10
10. IRS Enforcement Is Still Evolving — But Don't Count on Leniency This Year (2025)
The IRS delayed penalties for missed annual RMDs for 2021–2023 and extended relief again for 2024, they have not extended that relief to 2025.
This caused many people to believe:
- "Maybe annual RMDs won't be required."
- "Maybe the IRS will walk back the rule."
All the proposed regulations point in the same direction:
Annual RMDs will apply when the decedent was already taking RMDs.
This is the rule we can count on.
Summary
If the decedent died before RMD age:
→ No annual RMDs
→ Empty by year 10
If the decedent died after RMD age:
→ Annual RMDs required
→ Empty by year 10
Spouses:
→ Not under 10-year rule unless they choose it
Minor children:
→ Stretch first, then 10-year rule
Beneficiaries <10 years younger:
→ Stretch, no 10-year rule
Multiple beneficiaries:
→ Split accounts ASAP
IRS delays don't change the underlying law.
The rule still exists.
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