Inherited IRA Rules in 2026: The 10-Year Rule, RMDs, and Spousal Options

Why Inherited IRA Rules Are So Confusing

Inherited IRAs are one of the most rule-heavy parts of estate inheritance. The rules changed dramatically with the SECURE Act of 2019, then again with SECURE 2.0 in 2022, and the IRS finalized critical implementation details in 2024 (effective 2025).

What heirs face in 2026:

• The old "stretch IRA" (lifetime distributions stretched over the heir's life expectancy) is mostly dead for non-spouse beneficiaries
• The 10-year rule applies to most heirs -- the account must be fully distributed by the end of the 10th year after the original owner's death
• The IRS clarified that annual RMDs are required during the 10 years for most beneficiaries (an interpretation many tax advisors initially missed)
• Spouses retain favorable options that other heirs don't have
• A category of "eligible designated beneficiaries" can still stretch distributions over their lifetime
• Roth IRAs have somewhat different mechanics than traditional IRAs

This post walks through each category in order so you can find your situation and understand what you have to do.

Category 1: Spousal Beneficiary

If you're the surviving spouse and you're named as the IRA beneficiary, you have the most options of any heir. The right choice depends on your age, financial needs, and the deceased's age at death.

Option A: Roll Over Into Your Own IRA

The most common and usually best option for spouses who are at least mid-50s or older. You move the inherited IRA into your own existing IRA (or open a new IRA in your name to receive it). Once rolled over:

• The account is yours, treated as if you had always owned it
• RMDs start at your required beginning date (currently age 73 for those born 1951-1959, age 75 for those born 1960+)
• You can name your own beneficiaries
• You can convert to a Roth IRA if you want

This option makes sense when:

• You don't need immediate access to the funds
• You want to defer distributions as long as possible
• You want simplicity (one IRA instead of two)

Option B: Treat as Your Own (Without Rolling Over)

A subtle variant of Option A. You elect to treat the inherited IRA as your own without doing a formal rollover. The account stays at the same custodian; you just file a form. Same effect as a rollover.

Option C: Keep as an Inherited IRA

You leave the IRA in "inherited IRA" status, owned by the inherited account but managed by you as beneficiary. RMDs are based on your life expectancy (under the IRS Single Life Expectancy table), starting in the year after the deceased's death.

This option makes sense when:

• You're younger than 59½ and need access without the 10% early withdrawal penalty
• The deceased was significantly older than you, and the inherited IRA's longer RMD timeline benefits you
• You're not sure yet and want to preserve options (you can switch to Option A later, but not vice versa)

Option D: Take the 10-Year Rule Path

You can elect the same 10-year rule that non-spouse beneficiaries face. Rarely the right choice for a spouse, but available.

Special Case: Roth IRAs

For inherited Roth IRAs, the spousal options are similar, but:

• No RMDs during the spouse's lifetime if they roll into their own Roth IRA (Roth IRAs don't have RMDs for the original owner)
• Qualified distributions are tax-free if the Roth IRA has been open for at least 5 years (counting from the deceased's original Roth opening date or your own, whichever applies)

For most spousal beneficiaries, rolling an inherited Roth IRA into your own Roth IRA is the cleanest move -- no RMDs ever, tax-free distributions in retirement.

Category 2: Eligible Designated Beneficiary (EDB)

Eligible designated beneficiaries are exempt from the 10-year rule and can stretch distributions over their own life expectancy -- the "stretch IRA" that used to be available to everyone but now only to EDBs.

Who Qualifies as an EDB

• The surviving spouse (also covered under Category 1)
• Minor children of the original owner -- defined as under age 21 in most states. Once the minor reaches majority, they switch to the 10-year rule. (Note: this only applies to the original owner's own children, not grandchildren or stepchildren in most cases.)
• Disabled individuals -- as defined under IRS Section 72(m)(7). Disability must have been established as of the original owner's death.
• Chronically ill individuals -- as defined under IRS Section 7702B(c)(2), generally meaning unable to perform 2 of 6 daily living activities or requires substantial supervision due to cognitive impairment, expected to last 90+ days.
• Beneficiaries not more than 10 years younger than the deceased -- A sibling close in age to the deceased, or a near-peer friend.

RMD Mechanics for EDBs

EDBs take annual required minimum distributions based on their own life expectancy under the IRS Single Life Expectancy table. The first RMD is due by December 31 of the year following the deceased's death.

Each year, the RMD is calculated by dividing the previous December 31 account balance by the life expectancy factor for the beneficiary's age that year. The factor decreases each year, so RMDs gradually increase.

This stretch lets the inherited IRA continue growing tax-deferred (or tax-free for Roth) for decades, while only modest annual distributions come out. For a 50-year-old EDB inheriting a $500,000 IRA, the first RMD might be around $14,500 -- a small fraction of the account that allows decades of continued growth.

Category 3: Designated Beneficiary (Subject to 10-Year Rule)

Most heirs fall into this category. You're a "designated beneficiary" (named on the account) but you're not an "eligible designated beneficiary." Examples:

• Adult children of the deceased
• Adult grandchildren
• Adult siblings (unless within 10 years of age)
• Friends
• Most non-relatives

The 10-Year Rule

You must empty the inherited IRA by the end of the 10th year following the original owner's death. For someone who died in 2024, the deadline is December 31, 2034.

Annual RMDs During the 10 Years

This is where the 2024 final IRS regulations changed things. Initially after the SECURE Act, many tax advisors interpreted the 10-year rule as flexible -- distribute however you want, as long as the account is empty by year 10. The IRS clarified in 2024 that:

• If the deceased died before their required beginning date (RBD) for RMDs: No annual RMDs are required during years 1 through 9. Beneficiaries can defer all distributions to year 10 if they want.
• If the deceased died on or after their RBD: Annual RMDs are required during years 1 through 9, calculated based on the beneficiary's life expectancy. Plus the account must be empty by end of year 10.

The required beginning date (RBD) is April 1 of the year after the year the IRA owner turns:

• 73 (for those born 1951-1959)
• 75 (for those born 1960+)

So in 2026, a deceased age 75+ likely had passed their RBD, which means their beneficiaries face the dual rule: annual RMDs plus the 10-year deadline.

Tax Planning for the 10 Years

The single biggest tax-planning question: when to take distributions.

The bad path: Wait until year 10, then take the entire balance. A $500,000 inherited traditional IRA distributed in one year pushes you into top federal tax brackets and likely top state tax brackets -- you could pay 35% to 45% in combined federal and state tax.

The good path: Spread distributions across the 10 years (or even more strategically -- big distributions in low-income years, small distributions in high-income years). For a $500,000 IRA, spreading $50,000/year of distributions over 10 years usually keeps you in the 22% or 24% federal bracket, saving tens of thousands.

For Roth inherited IRAs, the tax math doesn't apply (qualified distributions are tax-free), but you may still want to spread distributions to maximize tax-free compounding -- because once distributed, the funds become taxable assets in your normal account.

Category 4: Non-Designated Beneficiary (Estate or Non-Qualified Trust)

If the IRA's beneficiary designation names the estate (or there's no beneficiary on file and it falls to the estate) or names a non-qualified trust, different rules apply:

• If the deceased died before their RBD: The IRA must be fully distributed within 5 years.
• If the deceased died on or after their RBD: The IRA can be distributed over the deceased's remaining single life expectancy (sometimes longer than 10 years, sometimes shorter).

This is generally less favorable than naming individual beneficiaries directly. It's one of the reasons to always have a current beneficiary designation on file with the IRA custodian.

Step-by-Step: What to Do as a Beneficiary

Step 1: Don't Touch the Money Yet

Resist the urge to cash out the IRA quickly. Premature decisions can cost you tens of thousands in unnecessary taxes. Take 30 to 60 days to understand the rules and your options.

Step 2: Notify the IRA Custodian

Call the custodian where the deceased held the IRA (Fidelity, Schwab, Vanguard, etc.) and tell them the account holder died. They'll send a beneficiary claim packet.

Bring or send:

• Certified copy of the death certificate
• Your photo ID
• Your Social Security number
• The original IRA account number

Step 3: Determine Your Category

Walk through the categories above:

• Spouse (Category 1)
• Eligible designated beneficiary (Category 2)
• Designated beneficiary (Category 3)
• Non-designated (Category 4)

This determines your distribution options and timeline.

Step 4: Set Up an Inherited IRA

For non-spouse beneficiaries, you must create a separate "inherited IRA" (sometimes called a "beneficiary IRA") to hold the inherited assets. You cannot mix inherited IRA assets with your own retirement assets.

The inherited IRA must be titled: "[Your Name] as beneficiary of [Deceased Name's] IRA."

Step 5: Plan the Distribution Schedule

For 10-year-rule beneficiaries:

• Map out the deceased's date of death + 10 years = your deadline
• Estimate your annual income for each of the 10 years
• Plan distributions to optimize for your effective tax bracket each year
• Consider consulting a CPA or financial planner -- the tax savings often justify the fee

Step 6: Take Required Distributions On Time

If annual RMDs are required (deceased died after RBD), the first RMD is due by December 31 of the year after death. Missing an RMD triggers a 25% excise tax on the missed amount (reduced from 50% by SECURE 2.0, and reducible to 10% if corrected quickly).

For the final year (year 10), the entire remaining balance must be distributed by December 31. Missing this triggers significant penalties.

Special Topics

Multiple Beneficiaries

If an IRA has multiple beneficiaries, the custodian splits the account into separate inherited IRAs for each beneficiary by December 31 of the year following the deceased's death. Each beneficiary then follows the rules applicable to their category.

If one beneficiary is the spouse and others are non-spouses, splitting the account is essential -- otherwise the spouse loses the favorable spousal options.

Trusts as Beneficiaries

Trusts named as IRA beneficiaries face complex rules. A "see-through" trust that meets specific IRS requirements can let the trust beneficiaries use their own rules (potentially as EDBs or under the 10-year rule). A trust that doesn't qualify as a see-through trust is treated as a non-designated beneficiary (Category 4).

If you've inherited an IRA through a trust, work with an estate attorney to determine the trust's treatment. Errors here can dramatically change the required distribution timeline.

Inherited Roth IRAs

Roth IRAs follow the same rules above for who's an EDB and who's subject to the 10-year rule. But:

• Distributions are tax-free if the original Roth IRA had been open at least 5 years (the holding period passes to beneficiaries)
• No required annual RMDs during the 10-year period for non-EDB Roth IRA beneficiaries (because the deceased Roth IRA owner didn't have RMDs themselves)
• The account must still be emptied by year 10

The tax advantage of Roth IRAs makes them a particularly valuable inheritance -- decades of growth, distributed tax-free.

Inherited 401(k)s

Inherited 401(k)s follow similar rules but with some 401(k)-specific quirks. Many heirs roll an inherited 401(k) into an inherited IRA (called a "trustee-to-trustee" transfer or "direct rollover") to access better investment options and consolidate with other inherited assets. Spouses can roll into their own IRA.

Common Mistakes

• Cashing out the IRA in one tax year. Pushes you into top brackets and creates massive avoidable tax. Spread distributions over the 10-year window.
• Missing the 10-year deadline. Penalties for failing to empty the account by year 10 are severe. Mark your calendar.
• Mixing inherited IRA assets with your own retirement accounts. This is illegal for non-spouse beneficiaries and creates compliance problems.
• Forgetting annual RMDs. Especially if the deceased died after their RBD. The 25% excise tax (or 10% if corrected) hurts.
• Naming a spouse and children equally as beneficiaries without splitting. If the IRA isn't split by year-end after death, the rules default to the most restrictive beneficiary's category -- losing the spouse's options.
• Disclaiming without thinking through downstream effects. A spouse who disclaims may pass the IRA to children who are then subject to the 10-year rule instead of the spouse's lifetime stretch.

How SwiftProbate Can Help

Inherited IRAs sit at the intersection of estate administration and personal tax planning. SwiftProbate's checklist prompts you to inventory all retirement accounts the deceased owned, identify the named beneficiaries (and flag the missing ones that fall to the estate), and walks through what each beneficiary needs to do based on their category. We don't replace tax or financial planning advice for the distribution strategy -- but we make sure you don't miss the existence of these accounts or the critical deadlines.

This article is for informational purposes only and is not legal or tax advice. Consult a qualified attorney, CPA, or financial planner for guidance specific to your situation.