Inheriting an IRA used to come with a generous deal: a non-spouse heir could “stretch” withdrawals over his or her own life expectancy, letting a parent’s retirement account keep growing tax-deferred for decades. That deal ended for most people who inherited after 2019, and the replacement, the 10-year rule, has gone through so many rounds of IRS relief and revision since then that plenty of beneficiaries genuinely do not know what they currently owe.
Here is where the rules actually stand in mid-2026, based on the IRS’s own guidance. The short version: most non-spouse beneficiaries must empty the account within 10 years, many of them must also take a withdrawal every year along the way, and the grace period that excused missed withdrawals is over.
Who the 10-year rule applies to
Under the SECURE Act, when an IRA owner died in 2020 or later, a designated beneficiary who is not an “eligible designated beneficiary” must fully distribute the account within 10 years of the owner’s death. In practice, that covers the most common inheritance of all: an adult child inheriting from a parent. The clock runs to December 31 of the tenth year after the year of death. Inherit in 2026, and the account must be empty by December 31, 2036.
The IRS lists the exceptions, the eligible designated beneficiaries, on its beneficiary rules page: a surviving spouse, the owner’s minor child (the 10-year clock starts once the child reaches the age of majority), a disabled or chronically ill person, and anyone not more than 10 years younger than the deceased owner, such as a sibling close in age. Those beneficiaries can still take distributions over life expectancy, the old stretch treatment. A surviving spouse has even more room, including the option to treat the account as his or her own.
The part that surprises people: annual withdrawals inside the 10 years
For several years, it was reasonable to read the 10-year rule as one big deadline: empty the account by year 10, on whatever schedule you like. The IRS’s final regulations, issued in July 2024, settled the question differently. If the original owner died on or after his or her required beginning date for minimum distributions (which now falls at age 73), the beneficiary must take a required minimum distribution every year in years one through nine, based on the beneficiary’s life expectancy, and then clear out whatever remains by the end of year 10. If the owner died before that date, no annual withdrawals are required and only the year-10 deadline applies.
Because the guidance took so long, the IRS excused the annual withdrawals for 2021 through 2024. Notice 2024-35 was the last of those reprieves; it waived the penalty for missed 2024 payments and stated that the final regulations apply for determining required distributions for calendar years beginning on or after January 1, 2025. That grace period is now over. Beneficiaries who owed an annual withdrawal for 2025 had to take it by December 31, 2025, and the 2026 installment is due by the end of this year.
What it costs to miss one
The penalty for skipping a required withdrawal is an excise tax of 25 percent of the amount not taken, reduced to 10 percent if the mistake is corrected within two years under rules added by SECURE 2.0. The IRS can also waive the tax entirely for reasonable error if you take the missed distribution and file Form 5329 with an explanation. If you inherited a traditional IRA from someone who was already past 73 and you have taken nothing since, that waiver process, started promptly, is the sensible path. Do not simply wait and hope.
How the withdrawals are taxed
Distributions from an inherited traditional IRA are ordinary taxable income to the beneficiary in the year withdrawn, just as they would have been to the owner. One piece of good news: the 10 percent additional tax on early withdrawals does not apply to beneficiaries, regardless of age, as the IRS explains in Publication 590-B, its guide to IRA distributions.
Inherited Roth IRAs get gentler treatment. Roth owners have no lifetime minimum distributions, so for these accounts the owner is treated as having died before the required beginning date. That means a non-spouse beneficiary generally owes no annual withdrawals during the 10 years, only the requirement to empty the account by the end of year 10, and qualified distributions come out tax-free. Letting an inherited Roth ride until late in the window is often the tax-smart move, since the growth is never taxed.
The planning point: avoid the year-10 pile-up
For a traditional IRA of any size, taking only the bare minimum for nine years leaves a large forced withdrawal in year 10, all of it stacked into one year’s taxable income. That can push a beneficiary into a higher bracket, raise Medicare premium surcharges two years later, and tax more of a retiree’s Social Security. Many advisers instead suggest spreading withdrawals roughly evenly across the decade, or loading them into years when your other income dips, such as early retirement years. The IRS’s required minimum distribution FAQs cover the mechanics; the bracket strategy is up to you and, for larger accounts, worth an hour with a tax professional.
A quick checklist for 2026
1. Date of death matters. Deaths before 2020 stay under the old stretch rules. Deaths in 2020 or later put most non-spouse heirs on the 10-year clock.
2. Check whether the owner had reached age 73. If yes, you likely owe an annual withdrawal this year, not just a distant deadline.
3. Confirm the year-of-death distribution was taken. If the owner died after 73 without taking that year’s full minimum, the beneficiary must take the remainder.
4. Roth heirs: mark year 10 on the calendar. No annual requirement in most cases, but the final deadline is real.
5. If you missed 2025, act now. Correcting quickly is the difference between a 25 percent tax, a 10 percent tax, or possibly none at all.
The stretch IRA is not coming back. But a decade is still a long runway, and beneficiaries who know which version of the rule applies to them can spend it managing taxes instead of paying penalties.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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