What the inherited IRA 10 year rule really means, why Roth strategies matter, and how to tame taxes for your loved ones.
Most people assume their retirement accounts will simply “work themselves out” over time, but in reality the rules behind them can have a bigger impact on your family’s future than the investments themselves. Retirement accounts are powerful savings tools, yet the rules that govern them can quietly shape your lifetime tax bill and the legacy you leave.
In 2026, just a few years after the sweeping Secure Act reshaped the retirement landscape, one rule in particular now sits at the center of many financial planning and estate conversations and if it isn’t part of yours yet, it’s probably time to change that. In fact, when speaking with potential clients we find that some people are completely unaware of this 10 year rule.
First, what is the IRS’s inherited IRA 10 year rule? In short, this framework determines how quickly your beneficiaries must withdraw the assets they inherit, and how those withdrawals may be taxed.
A second, equally important reality is that most retirees are now required to begin taking minimum distributions at age 73 as opposed to 70.5 years old with this age set to increase again in 2033 to age 75. The timing and size of those mandatory withdrawals from traditional qualified accounts plays a major role in how much remains in traditional tax deferred accounts by the time those assets pass to the next generation.
Understanding these two rules, how your heirs must withdraw what you leave behind and how you’re required to withdraw what you keep during your lifetime, can turn a confusing set of regulations into a clear, intentional plan for both retirement and estate strategy.
A Decade of Withdrawals and the Year Ten Surprise
While this title sounds great in theory, not all surprises are good ones.
The new rules regarding Beneficiary IRAs were expanded greatly with the passing of the Secure Act in 2019, and the changes were so sweeping that even the IRS needed a few years to catch up and clarify their position. The IRS recently formalized this structure after several years of transition and normal enforcement resumes for 2025 and beyond.
Put into real world terms, the 10 year rule for the beneficiaries of Traditional qualified assets comes down to how quickly your beneficiary must draw down your IRA after you’re gone. With few exceptions, if a non spouse inherits your traditional IRA or 401(k), the account generally must be emptied by the end of the tenth year after your death. If you have already begun taking your own RMDs, your beneficiary will usually be required to take minimum annual withdrawals calculated using IRS tables in years one through nine and would still be required to have the account fully distributed by year ten.
One of the first stumbling blocks we see many beneficiaries make is not using those 10 years to their full advantage. It is common for the required annual withdrawals in years one through nine to be less than one tenth of the account. Without a plan, beneficiaries can arrive at year ten with a large remaining balance they must distribute, and unfortunately a large corresponding tax bill. The antidote is simple. We plan the withdrawals that beneficiaries take in years 1–9 and map a decade long schedule that aligns with the beneficiary’s personal income pattern, which may involve taking level annual withdrawals or taking larger withdrawals in lower income years. A little early planning can eliminate the final year crunch and help your beneficiaries keep more of the hard earned money you have saved.
Not everyone falls under this 10 year timeline. Certain “eligible designated beneficiaries” including surviving spouses, some minor children, beneficiaries close in age to the IRA owner, and individuals who meet disability or chronic illness criteria may use life expectancy based withdrawals instead of the strict ten year schedule. These exceptions are limited, oftentimes confusing, and require early elections and decisions to be made prior to taking control of the IRA assets. This is why it’s generally wise to work with a trusted financial planner to navigate how the 10 year rule will govern an inherited IRA.
As of recent updates and clarification released in 2024, a surviving spouse beneficiary has more flexibility than any other beneficiary. A spouse can treat the account as their own, roll the account to an IRA in their name, keep it as an inherited IRA, or follow the “as if” rule ultimately treating the account as if they are the deceased spouse for age purposes. The right choice depends on a myriad of factors including age and income needs. Choosing poorly can accelerate taxable income, so this is worth careful planning with a tax aware financial planner as well.
Right sizing Traditional IRA Balances Now for a Tax Efficient Future
We find that many children inherit these tax deferred IRAs during their peak earning years. This means that if the beneficiary must take annual withdrawals and empty the account by year ten, those distributions stack on top of the beneficiary’s regular income from working as well as any other income such as interest, dividends, capital gains, rental income, and more. That often can push income from the distributions into a higher marginal income tax bracket and increase the total paid to the IRS. The simplest way to make things easier for your heirs is to avoid handing them an oversized traditional IRA in the first place.
Traditional IRA Distributions over 59.5
If you are approaching or already in retirement, consider gradually reducing your traditional IRA while you can control the tax rate. A measured withdrawal plan in lower income years can keep you in friendlier tax brackets than your heirs while reducing what your loved ones must pull out later under the 10 year rule. If you are eyeing a large expenditure in retirement, it may be wise to speak with your financial planner about subsidizing some of that expense with qualified funds rather than paying for the expenditure purely with savings or non qualified funds.
For Younger Savers
Make Roth contributions including Roth 401(k) contributions where it fits. There are many reasons why prioritizing Roth contributions in your working years can pay off in the long run. Roth IRAs never have required minimum distributions for the owner. While heirs will still face a 10 year clock for withdrawal, qualified Roth distributions are typically income tax free, which can be much easier on beneficiaries in a higher tax bracket.
Roth Conversions
If you already have a sizeable balance in your traditional IRA, converting those retirement assets to Roth assets also remains a very popular strategy. Every dollar you convert during life is one less dollar your loved one must take as taxable income later in addition to the growth on that dollar. For families who expect heirs to be high earners, a multiyear conversion plan can be one of the cleanest ways to minimize the 10 year burden and pay less in taxes overall.
A Roth conversion moves dollars from a traditional IRA to a Roth IRA and creates taxable income for the IRA owner now for those converted dollars. The benefit is long term tax free growth, no lifetime RMDs from the Roth IRA, and a more tax efficient inheritance for heirs. The most effective approach is usually a series of partial conversions that fill up lower tax brackets in years when your income is modest, such as early retirement before Social Security and RMDs begin. The goal is to align conversion size with your tax bracket each year and revisit the plan annually.
Converting everything in a single year can trigger higher brackets or Medicare surcharges, so pacing and planning this strategy matters.
Use your tax bracket to your benefit
It’s important to understand how tax brackets can shift after the loss of a spouse. Tax filing status changes in the year after death and for the years that follow. In the year of death, the surviving spouse can still file a joint return which helps to avoid the compression of tax brackets that occur when filing as a single individual. Married filing jointly years can be a powerful window to accelerate Roth conversions or reduce higher tax traditional IRA balances while both spouses are still able to benefit from wider tax brackets. For many couples, being intentional during this period can make the long term plan to shift traditional IRA dollars into Roth assets significantly more impactful.
Choose your Beneficiaries Wisely and Review Often
When an IRA is divided among several beneficiaries, each heir manages a smaller account and a smaller set of required withdrawals during the 10 year period. That can make it easier to avoid pushing a single beneficiary into higher brackets, particularly if some heirs have lower incomes. We often see clients wanting to leave a small amount to young adults and minors often grandchildren or great grandchildren. Making these heirs beneficiaries to your traditional IRA assets can be a smart way to achieve this goal while leaving non qualified assets to the beneficiaries that are established and with higher earnings. Accurate, up to date beneficiary reviews are essential to ensure each person receives the correct share and these goals are met.
For the charitably inclined, there are options
If you already donate to a public charity, consider making those gifts directly from your IRA through a Qualified Charitable Distribution once you are at least 70½. A QCD counts toward your RMD and is excluded from AGI, which can help with both your tax brackets and your Medicare IRMAA thresholds. The annual QCD limit is indexed to inflation and is $111,000 per person for 2026. QCDs must go directly from the IRA custodian to an eligible charity, and it is recommended that you reach out to your financial planner for assistance with this distribution to ensure it is completed properly.
Additionally, if charitable giving is part of your legacy, naming a charity as a direct beneficiary of a traditional IRA can be tax efficient because the charity does not pay income tax. Your family and loved ones can instead receive Roth accounts, taxable accounts, or other assets that may receive a step up in basis under current law. This simple alignment can lower taxes across generations without changing your overall intent.
Bringing it together
In the end, there is no single strategy that solves every challenge created by the 10 year rule. What matters most is being proactive. There are a number of tools available that can ease the burden on your beneficiaries and help prevent your retirement accounts from becoming an unexpected tax problem for the people you care about.
Whether that means thoughtfully reducing traditional IRA balances during your lower income years, building Roth assets through contributions or conversions, incorporating charitable planning, or simply updating your beneficiary designations, the goal is the same. A clear plan, reviewed regularly with your financial planner, can help ensure your life’s savings support your family rather than surprise them with a tax bill later.
