Inherited IRA Planning: 10-Year Rule, Annual RMDs, and Tax Strategy for 2026

The SECURE Act (2019) replaced the "stretch IRA" for most beneficiaries with a 10-year distribution deadline. Then T.D. 10001 (July 2024) added a second requirement: if the person you inherited from had already started RMDs, you must also take annual distributions in years 1–9 — not just drain the account by year 10. The IRS waived penalties on the annual RMD requirement through 2024; enforcement began in 2025. If you inherited a traditional IRA and haven't started annual distributions, you may be behind — and the penalty is 25% of the amount you should have withdrawn.

Who is subject to which rules

Your distribution rules depend on your relationship to the deceased and when they died. There are three tiers:

All rules apply to deaths after December 31, 2019 (SECURE Act effective date¹). If you inherited before 2020, you are grandfathered under the old rules and may continue using the stretch IRA with your original life expectancy calculation.

What is an eligible designated beneficiary (EDB)?

The SECURE Act created a protected class of beneficiaries who are exempt from the 10-year rule. To qualify as an EDB, you must be one of the following at the time the IRA owner died:²

1. Surviving spouse — the most common EDB, with additional unique options (see below).
2. Minor child of the deceased account owner — not a grandchild or step-child unless formally adopted. Can stretch until reaching the age of majority (treated as age 21 for this purpose), then the 10-year rule kicks in for the remaining balance.
3. Disabled individual — must meet the Social Security Administration's definition of disability. Self-certification is not sufficient; SSA determination or equivalent documentation is required.
4. Chronically ill individual — certified by a licensed health care practitioner; must be unable to perform ≥2 activities of daily living or require substantial supervision due to a cognitive impairment.
5. Individual not more than 10 years younger than the decedent — a sibling or friend of similar age, for example. This is a favorable rule: inheriting from a parent typically doesn't qualify (most adult children are more than 10 years younger), but inheriting from a slightly-older sibling might.

Most adult children inheriting from parents do not qualify as EDBs — they fall into the non-EDB / 10-year-rule category. This is who the rest of this guide primarily addresses.

Surviving spouse options

A surviving spouse has more choices than any other beneficiary. The right election depends on your age, whether you need the money now, and whether your late spouse was older or younger than you.

Option 1: Roll to your own IRA

The most common choice for spouses past age 59½. You roll the inherited IRA into your own traditional IRA. Result:

• Your own RMD rules apply — no RMDs until you reach your required beginning date (age 73 for those born 1951–1959; age 75 for 1960+).
• You can use the more favorable Uniform Lifetime Table (Table III) for your own RMDs, which assumes a joint life expectancy even if you're single.
• You can designate your own beneficiaries, who will then be subject to the 10-year rule when you die.
• You can contribute to the account if you have earned income and are under age 73.

Option 2: Keep as an inherited IRA (remain beneficiary)

You maintain the account as an inherited IRA titled in the decedent's name for your benefit. This is often the better choice when:

• You are under 59½ and may need to access funds before that age (no penalty from inherited IRA).
• Your late spouse was significantly younger than you — as the beneficiary, you delay RMDs until the year your spouse would have reached their RBD, which may be later than your own.
• You are already in a high bracket and want flexibility over distribution timing.

As a surviving spouse keeping the inherited IRA, you take annual distributions based on your own Single Life Expectancy (Table I). RMDs begin in the year your late spouse would have turned 73 (or 75 if born 1960+), or immediately if they had already begun.

Option 3: Treat as deceased spouse's IRA (SECURE 2.0 election)

Starting in 2024, SECURE 2.0 created a third option: a surviving spouse can elect to calculate RMDs as if they were the deceased spouse — using the Uniform Lifetime Table based on what the decedent's RMDs would have been. This can be advantageous when the deceased spouse was significantly younger, because you'd use their (longer) life expectancy for distributions rather than your own.

Other eligible designated beneficiaries: the stretch IRA

If you qualify as an EDB (disabled, chronically ill, or within 10 years of the decedent's age), you avoid the 10-year rule. Instead, you take annual distributions based on your own single life expectancy using IRS Table I (Single Life Expectancy, Appendix B of Publication 590-B³).

The calculation works as follows:

1. In the year after the decedent's death, find your age on Table I and record the life expectancy factor.
2. Take that factor as your initial divisor.
3. Each subsequent year, reduce the divisor by 1.0 — regardless of what Table I shows for your new age.
4. Your annual RMD = prior December 31 account balance ÷ current divisor.

This gives EDB beneficiaries a meaningful stretch — a 60-year-old EDB beneficiary starts with a divisor of approximately 27.7, meaning only about 3.6% of the account is required each year, and the account can grow substantially over decades if taken slowly.

Exception for minor children: When the minor child reaches the age of majority (treated as 21 under SECURE Act rules), the stretch period ends and the 10-year rule begins for the remaining balance. The child must drain the account by December 31 of the year that is 10 years after the year they reach majority.

Non-EDB beneficiaries: the 10-year rule

Most adult children and other non-spouse beneficiaries fall here. The rule: you must distribute the entire inherited IRA balance by December 31 of the 10th calendar year after the year the account owner died.¹

Example: Parent dies on September 15, 2025 → full balance must be distributed by December 31, 2035.

There is no requirement that you take equal distributions, or any distribution at all, in years 1–9 unless the decedent had already begun RMDs (see next section). Subject to that constraint, you can time distributions strategically around your own income.

Critical distinction: did the decedent die before or after their required beginning date (RBD)?

This is the most consequential question for non-EDB beneficiaries, and the one that caught millions of beneficiaries off guard.

The required beginning date (RBD) is April 1 of the year after the year the IRA owner turned 73 (for those born 1951–1959) or 75 (for those born 1960+). Anyone who had already reached their RBD had, by definition, begun taking RMDs.

Catch-up problem: If you inherited in 2020, 2021, 2022, 2023, or 2024 from someone past their RBD, and took no distributions during the waiver period, you are not automatically penalized for those years — the IRS waiver covered them. But you must have started taking annual RMDs by December 31, 2025 (the first enforcement year). The 10-year clock continues regardless.

Calculating your annual RMD from an inherited IRA

When annual RMDs are required, the calculation uses the IRS Single Life Expectancy Table (Table I, Appendix B of IRS Publication 590-B³). The formula:

The reset rule — and the fixed-reduction method

In your first distribution year (the year after the decedent's death), you find your age on Table I and record that factor. Then, each subsequent year, you reduce the factor by exactly 1.0 — you do not go back to Table I to look up your new age. This is the fixed-reduction method.

Example: Beneficiary is age 63 in year 1 (first distribution year). Table I factor at 63 is 25.0.

Balance projections are illustrative. Actual balance depends on investment returns, which are not guaranteed. Table I factors from IRS Publication 590-B, Appendix B.

Notice that the required annual distribution grows each year — both because the divisor shrinks and because a growing account multiplied by a rising percentage produces an accelerating mandatory withdrawal. In year 10, the entire remaining balance (possibly $750,000–$900,000 depending on returns) must be distributed and taxed as ordinary income in a single year. This is why front-loading distributions in lower-income years is often the right strategy (see Tax Strategy below).

Partial Table I reference

Factors shown are illustrative from the 2022 updated IRS Single Life Expectancy Table. Always verify against IRS Publication 590-B for your specific distribution year. Remember: after the initial factor is set in year 1, reduce by 1.0 per year — do not look up your current age in subsequent years.

Inherited Roth IRA rules

Inherited Roth IRAs follow largely the same beneficiary framework — EDB vs. non-EDB — with one critical difference: because the original Roth IRA owner was never subject to lifetime RMDs, there is no "after RBD" category. A Roth IRA owner is never past their required beginning date because there is no required beginning date for Roth IRAs.

For non-EDB beneficiaries of inherited Roth IRAs:

• The 10-year rule applies — the account must be fully distributed by December 31 of the 10th year after the owner's death.
• No annual RMDs are required in years 1–9. You can let the account grow tax-free and withdraw everything in year 10, or take distributions in any pattern you choose.
• Distributions from an inherited Roth IRA are income-tax-free if the 5-year holding period was satisfied by the original owner. Most inherited Roth IRAs meet this threshold — the 5-year clock runs from the year of the first Roth contribution or conversion, not the beneficiary's inheritance date.
• Even inherited Roth distributions are included in MAGI for IRMAA purposes (see below).

Tax strategy: sequencing the 10-year drawdown

For non-EDB beneficiaries of traditional inherited IRAs, the 10-year rule is a forced distribution event — but you have significant control over the timing. The right strategy depends on your own income, tax bracket, IRMAA exposure, and Roth conversion plan.

Strategy 1: Front-load distributions (take more in early years)

When this makes sense:

• You are retired and in a lower bracket now than you expect to be in years 8–10 (e.g., before Social Security begins, before your own RMDs start).
• You have unused capacity in lower tax brackets (12% or 22%) that will disappear once SS or your own RMDs arrive.
• You want to minimize year-10 concentration risk — taking a $600,000 mandatory distribution in year 10 is a catastrophic tax event if not managed.

What to watch: Larger early distributions increase your current AGI, which can trigger IRMAA surcharges and increase the taxable portion of Social Security. Model your MAGI before taking large extra distributions.

Strategy 2: Level annual distributions (smooth the income)

When this makes sense:

• Your bracket is relatively stable year-over-year.
• You want predictability for IRMAA and SS planning.
• You are subject to annual RMDs anyway (decedent died after RBD), so the IRS is already setting a baseline — you're choosing whether to take more than the minimum.

Level distributions spread the tax cost evenly and are often the default for beneficiaries who are already taking the annual RMD minimum. The question is whether to take only the minimum or to voluntarily take more to avoid a large year-10 spike.

Strategy 3: Back-load distributions (defer, take mostly in years 8–10)

When this makes sense:

• You are still working and in a high bracket now; you expect to retire and drop brackets during the 10-year window.
• Only available if decedent died before their RBD — if annual RMDs are required, you cannot take nothing in years 1–9.

What to watch: The account balance continues to grow tax-deferred, which is valuable — but back-loading concentrates a larger, taxable distribution into later years when your own RMDs and Social Security may already push your bracket up. Also, if you die before year 10, your beneficiaries inherit the problem (they do not get a new 10-year window — the clock continues from the original decedent's death).

The Roth conversion interaction

If you have your own traditional IRA and were planning Roth conversions during your pre-RMD window, the inherited IRA distributions will consume bracket space. Every dollar of inherited IRA income pushed into the 22% or 24% bracket is a dollar that can't be converted from your own IRA at that rate. You may need to reduce your own Roth conversions to stay under IRMAA thresholds — or accelerate them before the inherited IRA distributions become large.

How inherited IRA income collides with your retirement income picture

For retirees with existing income from Social Security, pensions, or their own IRA withdrawals, a mandatory inherited IRA distribution adds a new layer of income that interacts with every other part of the plan.

Social Security taxation cascade

Inherited IRA distributions are counted in full when calculating provisional income for the Social Security taxation test (IRC §86). If you're near the $34,000 (single) or $44,000 (MFJ) upper threshold — above which 85% of SS is taxable — an inherited IRA distribution can push you into the 85% tier and create a marginal rate well above your stated bracket. A $10,000 inherited IRA distribution that causes $8,500 more of SS to become taxable is effectively taxed at 185% of your stated bracket rate on that $10,000 slice.

IRMAA Medicare surcharge exposure

Inherited IRA distributions — even distributions from an inherited Roth IRA — increase your MAGI, which is the basis for IRMAA Medicare surcharge calculations. In 2026, the Tier 1 threshold is $109,000 (single) / $218,000 (MFJ). A beneficiary whose AGI would normally sit at $95,000 (single) can easily cross the $109,000 cliff with an unexpected $20,000 required distribution — adding $81.20/month ($974/year) in extra Medicare Part B premiums for the following year.

IRMAA is assessed on a 2-year lookback: 2026 IRMAA is based on 2024 MAGI. If you inherited in 2025, your first required distribution year is 2026, and that income will affect 2028 IRMAA. Plan 2 years ahead.

0% long-term capital gains bracket

Inherited IRA distributions are ordinary income, not capital gains — but they raise your AGI, which compresses the amount of income eligible for the 0% long-term capital gains rate. In 2026, the 0% LTCG threshold is approximately $96,700 (MFJ) and $48,350 (single). If inherited IRA distributions fill your bracket up to those limits, any capital gains from taxable accounts will spill into the 15% rate.

Your own Roth conversion window

If you're between your retirement date and age 73/75 (when your own RMDs begin), that window is your best opportunity to do Roth conversions at lower rates. Inherited IRA distributions compete directly for that bracket space. Coordinate the two: if the inherited IRA forces $35,000 of income at the 22% rate, you may have little room left for Roth conversions before hitting 24% or crossing an IRMAA tier. An advisor who sees both your own IRA and the inherited account can optimize the combined strategy.

QCDs are not available from inherited IRAs

Qualified charitable distributions (QCDs) allow IRA owners age 70½+ to donate up to $111,000 (2026) directly from their IRA to charity, tax-free, satisfying part of their own RMD. This option does not apply to inherited IRAs. QCDs must come from the IRA owner's own account — a non-spouse beneficiary cannot use a QCD to satisfy an inherited IRA annual RMD. (A surviving spouse who rolled the inherited IRA to their own IRA may eventually be eligible for QCDs from their own account, once they reach 70½.)

Common mistakes and deadlines

Mistake 1: Assuming the annual RMD waiver still applies

The IRS penalty waiver for annual RMDs on inherited IRAs ended after 2024. IRS Notice 2024-35 was explicit: 2024 was the last year of relief. If you inherited from someone past their RBD, you must have taken your 2025 annual RMD by December 31, 2025. If you did not, you may owe the 25% excise tax (or 10% if corrected promptly). Consult a tax professional immediately.

Mistake 2: Confusing the 10-year endpoint

The 10-year deadline is December 31 of the 10th calendar year after the year of death — not 10 years from the exact date of death. If your parent died in June 2024, the 10-year deadline is December 31, 2034, not June 2034. This gives you a few extra months in a practical sense, but the year-10 deadline is absolute and non-extendable.

Mistake 3: Concentrating income in year 10

Beneficiaries who take nothing for 9 years and attempt to withdraw the entire account in year 10 face a potentially catastrophic ordinary income event — possibly pushing them into the top federal bracket and causing multi-tier IRMAA surcharges. The solution is deliberate annual distributions over the 10-year window.

Mistake 4: Naming a trust without verifying it qualifies as a see-through trust

Many people name a trust as the IRA beneficiary for estate planning reasons. A trust that does not meet the IRS's "see-through trust" requirements (conduit or accumulation trust with qualifying beneficiaries) is treated as a non-person beneficiary, triggering either the 5-year rule or the decedent's remaining life expectancy — not the 10-year rule. A trust named as beneficiary should be reviewed by an estate attorney who understands the post-SECURE Act rules.

Mistake 5: Missing the deadline to open an inherited IRA

After inheriting, you must open a properly-titled inherited IRA account (typically "John Smith IRA for benefit of Jane Smith, beneficiary") within a reasonable time. If the assets are liquidated and paid to you directly, they are treated as a full distribution — taxable in full and not eligible for rollover. Surviving spouses have 60 days for a rollover; non-spouses cannot do a 60-day rollover at all (inherited IRA to inherited IRA transfers are allowed; rollover to own IRA is only for spouses).

Worked example: David inherits at 63

David (single, age 63 in 2025) inherits a $750,000 traditional IRA from his father, who was 88 when he died in April 2025. His father had been taking RMDs since age 73 — clearly past his RBD. David is already retired, receiving $38,000/year in Social Security and taking $22,000/year from his own IRA for discretionary spending. His Medicare Part B premium is based on his 2023 MAGI of $82,000 — safely below the $109,000 single Tier 1 IRMAA threshold.

Annual RMD calculation: David is 63 in 2025; he will be 64 in 2026 (the first required distribution year). His Table I factor for age 64 is approximately 24.2. His father's account grew from $750,000 to ~$787,500 by December 31, 2025 (5% return).

Year 1 (2026) required minimum distribution: $787,500 ÷ 24.2 = $32,542

Income picture in 2026:

David is below the $109,000 IRMAA cliff in year 1, but his margin has compressed from $54,700 to $22,158. As the required distribution grows (by roughly $1,500–$2,000/year), and as his own IRA balance (and eventual RMDs at age 75) grows, the margin will shrink further.

The Roth conversion squeeze: David was planning to convert $15,000/year from his own IRA to Roth, using the gap below the IRMAA cliff. With the inherited IRA distribution at $32,542, his remaining IRMAA headroom is only $22,158 — less than his original conversion target. He scales back conversions to $15,000, which combined with his other income brings his projected MAGI to approximately $101,842 — still under $109K, but with little buffer if interest income or capital gains push him over.

Year-10 projection: If David takes only the annual RMD minimum each year and the account earns 5%, his balance in 2034 (the end of year 9) will be approximately $640,000. That entire balance must be distributed in 2035 — added to his Social Security, his own IRA withdrawals, and his own RMDs (which begin at age 75 for David, born in 1962). The 2035 tax event could easily push David into the 37% bracket for that year alone. The solution is to voluntarily front-load distributions now, taking $50,000–$60,000/year from the inherited IRA (above the RMD minimum) while his bracket permits it, rather than deferring the problem.

Inherited IRA planning checklist

• Determine your beneficiary category: surviving spouse, EDB, non-EDB, or non-designated. This determines your rules entirely.
• If non-EDB: establish whether the decedent died before or after their required beginning date. This determines whether annual RMDs are required in years 1–9.
• If annual RMDs are required: confirm the starting year and calculate your first-year distribution using Table I (IRS Pub 590-B, Appendix B). The factor is based on your age in the first distribution year.
• Check for catch-up exposure: if you inherited from someone past their RBD in 2020–2024 and did not take annual RMDs, confirm with a tax professional whether you need to take make-up distributions and whether any penalty applies.
• If surviving spouse: decide between roll-to-own-IRA vs. inherited IRA vs. SECURE 2.0 election. If under 59½, keep as inherited IRA until you're past that age.
• Map the inherited IRA distributions against your own income: SS provisional income thresholds ($34K/$44K), IRMAA cliff ($109K/$218K), Roth conversion headroom, 0% LTCG bracket.
• Model year 10: project the remaining balance and model what a full distribution in year 10 would do to your tax bracket. If the answer is "catastrophic," front-load distributions now.
• If you're doing Roth conversions from your own IRA: coordinate the two streams. Inherited IRA income competes for bracket space.
• Do not attempt a QCD from an inherited IRA (not available to non-spouse beneficiaries).
• If a trust is named as beneficiary: verify it qualifies as a see-through trust under SECURE Act rules with an estate attorney.
• Set a calendar reminder: the 10-year deadline is December 31 of the 10th year after the year of death. It is absolute.

Get matched with an advisor who specializes in inherited IRA planning

Inherited IRA decisions involve your own retirement income, your bracket, IRMAA exposure, and Roth conversion strategy simultaneously. A fee-only advisor who specializes in retirement income distribution can model the optimal drawdown sequence — whether to front-load, back-load, or level-distribute over the 10-year window — and coordinate it with your own accounts so you're not doubling your tax bill in year 10.