Inherited IRAs &
the 10-Year Rule
An IRA left to family, a trust, or the estate now comes with a deadline. Most inherited accounts must be emptied within 10 years, some require a withdrawal every year along the way, and the IRS has been enforcing the yearly withdrawals since 2025.
Last reviewed
What changed in 2020
Before 2020, most people who inherited an IRA could stretch withdrawals over their own lifetime, taking small amounts each year. The SECURE Act ended that for most beneficiaries of owners who died after 2019. Now, most inherited IRAs must be completely emptied by December 31 of the tenth year after the year of death.
A few beneficiaries can still stretch withdrawals over their life expectancy: the surviving spouse, the owner’s minor children (until age 21), beneficiaries who are disabled or chronically ill, and beneficiaries not more than 10 years younger than the owner.
Is a withdrawal required every year?
This is the question that caused years of confusion, and the IRS settled it in 2024. The answer depends on whether the person who died had already started taking their own required minimum distributions (generally starting at age 73).
- They had started: beneficiaries must take a minimum amount every year in years one through nine, and empty the account by the end of year ten.
- They had not started, or it is a Roth IRA: no yearly minimum, but the account must still be empty by the end of year ten.
The 10-year clock
When a trust is the beneficiary
Many people name a trust as their IRA beneficiary to protect the money for children or grandchildren. If the trust meets the IRS requirements (it is valid, it became irrevocable at death, and its beneficiaries can be identified), the payout rules are based on the people the trust is for.
The trust document then decides what happens to money taken out of the IRA:
- Conduit trust: every withdrawal must be passed straight through to the beneficiary, who pays the income tax at their own rates.
- Accumulation trust: the trustee can keep withdrawals in the trust. Money kept inside is taxed at trust rates, which reach 37% at just $16,000 of income in 2026.
For an accumulation trust, the most important tax decision each year is how much of the IRA income to pass out to beneficiaries versus keep inside. We run those numbers before the trust’s return is filed, including whether a distribution in the first 65 days of the next year can still count for the prior year.
When the estate is the beneficiary
If no beneficiary was named, or the estate was named, the rules are less favorable. The account generally must be paid out within five years if the owner had not started required distributions, or over the owner’s remaining life expectancy if they had. Withdrawals are taxed to the estate unless they are passed out to the heirs.
Before assuming the estate is the beneficiary, confirm the beneficiary form with the IRA custodian. Many accounts have a named beneficiary the family did not know about.
Taxes on every withdrawal
Withdrawals from an inherited traditional IRA are fully taxable income. There is no step-up in basis the way there is for a house or brokerage account. If the estate paid federal estate tax, there may be a deduction that offsets part of the income tax on the IRA withdrawals, and it is frequently missed. Inherited Roth IRA withdrawals are generally tax-free.
What we handle
- Confirming who the beneficiary is and which payout rule applies
- Calculating the yearly minimum withdrawal when one is required
- Planning withdrawals over the 10 years to manage the tax
- Trust returns when a trust inherits the IRA, including how much to pass out to beneficiaries
- Correcting missed withdrawals and requesting penalty relief
- The estate tax deduction on IRA income when the estate paid federal estate tax
Frequently Asked Questions
What is the 10-year rule for inherited IRAs?
For IRA owners who died after 2019, most beneficiaries must empty the inherited account by December 31 of the tenth year after the year of death. Surviving spouses, the owner’s minor children (until age 21), disabled or chronically ill beneficiaries, and beneficiaries not more than 10 years younger than the owner can still stretch withdrawals over their life expectancy.
Do beneficiaries have to take money out every year?
It depends on whether the person who died had already started their own required minimum distributions. If they had, beneficiaries under the 10-year rule must take a minimum amount each year in years one through nine and empty the account by year ten. If they had not started yet, or the account is a Roth IRA, there is no yearly minimum, but the account still has to be empty by the end of year ten. The IRS waived penalties for missed yearly amounts from 2021 through 2024, but it has enforced them since 2025.
What happens when a trust is the IRA beneficiary?
If the trust meets the IRS requirements for a see-through trust, the payout rules are based on the trust’s beneficiaries. The trust document then decides whether money taken from the IRA must be passed out to the beneficiaries (a conduit trust) or can be kept in the trust (an accumulation trust). Money kept in the trust is taxed at trust rates, which reach 37% at $16,000 of income in 2026, so the trustee’s distribution decisions each year have a large effect on the total tax paid.
What if the estate is the IRA beneficiary?
When no beneficiary was named, or the estate was named, the account usually must be paid out faster: within five years if the owner had not started required distributions, or over the owner’s remaining life expectancy if they had. The withdrawals are taxed to the estate unless they are passed out to heirs. It is worth confirming the beneficiary form with the custodian before assuming the estate is the beneficiary.
Related services
Income in Respect of a Decedent
IRA withdrawals get no step-up, but there may be a deduction if estate tax was paid.
Estate & Trust Income Tax
Where IRA withdrawals kept by a trust or estate are taxed.
65-Day Rule Election
Passing IRA income out to beneficiaries after year-end, when the numbers are known.