Inherited an IRA? Get it out within a decade or lose it

The old “stretch IRA” rule is mostly gone for people who inherit IRAs from someone who is not their spouse. Before 2020, kids, grandkids, or other heirs could take money slowly over their lifetime, helping the money grow tax-free for many years. The government felt this was a loophole and decided to stop it through a law called the SECURE Act in 2019.

New 10-year rule explained

Now, most people who inherit an IRA after 2019 must withdraw all the money within 10 years. Example: If someone dies in May 2025, the account must be emptied by December 31, 2035, as stated by The Kiplinger.

Who does NOT follow this rule

Some people are exempt from the 10-year rule, like spouses, minor children (till age 21), disabled or chronically ill people, and those close in age to the owner. People who inherited IRAs before 2020 also do not need to follow the 10-year rule. Spouses can even treat the IRA as their own and continue taking money slowly over their lifetime.

Confusion about withdrawals

Earlier, experts thought you could take money anytime within 10 years — even wait till the last year. But in 2022, the IRS proposed rules that made things more confusing.

Big difference based on owner’s age

The rules depend on whether the original owner had started taking RMDs (required minimum distributions) before death. If the owner died before RMD age, beneficiaries don’t need yearly withdrawals and can take money anytime within 10 years, as stated by The Kiplinger.

If the owner died after starting RMDs, then yearly withdrawals are required for years 1–9. In that case, the account must still be fully emptied by year 10. The yearly amount is based on the beneficiary’s age — younger people withdraw smaller amounts yearly. In July 2024, the IRS finalized the rules and kept this confusing difference based on RMD timing.

Relief for 2020–2023 cases

Due to confusion, the IRS gave relief for people who inherited IRAs between 2020 and 2023. If they missed yearly withdrawals, they won’t be penalized. They also don’t need to “make up” missed withdrawals later. From 2025 onward, they just continue with remaining required withdrawals and finish within 10 years, as cited by The Kiplinger.

If someone inherited an IRA in 2022 and didn’t take money in 2023–2024, they don’t need to fix that. They just start withdrawals in 2025 and complete the process within the remaining years.

Roth IRA rules

Roth IRA heirs also must empty the account within 10 years. But withdrawals from Roth IRAs are usually tax-free. No yearly withdrawal rule applies here, because original owners didn’t have RMDs. Beneficiaries can take money anytime — early, late, or in parts — as long as the account is empty by year 10.

The old long-term “stretch” benefit is mostly gone, and most heirs now must finish withdrawals within 10 years, as per the report by The Kiplinger. The biggest confusion is about whether yearly withdrawals are needed — and that depends on when the original owner died.

FAQs

Q1. What is the new 10-year rule for inherited IRAs?

Most non-spouse heirs must withdraw all money from an inherited IRA within 10 years of the owner’s death.

Q2. Do I need to take money every year from an inherited IRA?

It depends—yearly withdrawals are needed only if the original owner had already started taking RMDs.