Inherited IRA RMDs: What the Rules Mean for 2026 and Beyond

IRAs hold a massive share of Americans’ retirement savings — about $18 trillion as of mid-2025 — and more of those assets are changing hands each year as families move through the Great Wealth Transfer. For many heirs, the largest asset they inherit isn’t a house or a brokerage account. It’s an IRA.

And that’s where the complexity begins.

Over the past several years, Congress and the IRS have rewritten the rules governing Required Minimum Distributions (RMDs) from inherited IRAs. These changes affect how fast inherited retirement accounts must be withdrawn as well as how much tax beneficiaries may ultimately pay.

What are RMDs

A traditional IRA allows money to grow tax-deferred, but not forever. At some point, the IRS requires withdrawals known as Required Minimum Distributions (RMDs), which are generally taxed as ordinary income.

For IRA owners:

• Most people must begin taking RMDs at age 73.
• This age will rise to 75 in 2033 under current law.
• Missing an RMD can trigger a penalty.
  
  

What changes when someone inherits an IRA?

When a person inherits a traditional IRA, that person becomes a beneficiary, and the rules shift. Instead of focusing on the beneficiary’s age, the distribution rules depend on:

• Who the IRA was inherited from
• The recipient’s relationship to that person
• Whether the original owner had already started taking RMDs

The SECURE Act

In 2019, Congress passed the SECURE Act (Setting Every Community Up for Retirement Enhancement Act). One of its most important changes took effect for most inherited IRAs starting in 2020. Before this law, many beneficiaries could “stretch” IRA withdrawals over their lifetime, spreading taxes out for decades. The SECURE Act largely eliminated that strategy. The new default is the “10-year rule.”

Under the SECURE Act:

• As of 2020, most non-spouse individual beneficiaries who inherit an IRA must empty the account within 10 years of the original owner’s death.
• Withdrawals may be taken at any pace during those 10 years, including all at once, but the account must be fully distributed by the end of year 10.

This rule alone accelerated taxes for many heirs. And for several years, it was unclear whether beneficiaries also had to take annual RMDs during those 10 years. That question was answered in additional IRS regulations issued in July 2024, which clarified:

• If the original IRA owner died after they had begun RMDs, most beneficiaries must take annual RMDs in years 1–9, and empty the account by the end of year 10.
• If the original owner died before they had begun RMDs, annual withdrawals are generally not required, but the account must still be fully distributed by the end of year 10.

This distinction is now firmly part of the law and missing it can lead to penalties.

Penalties for Missed Inherited RMDs

Because IRS guidance evolved over time, many beneficiaries were unsure what rules applied. To address this, the IRS issued a series of notices that temporarily waived penalties for certain missed inherited IRA RMDs from 2021 through 2024.

Based on current guidance, beneficiaries should assume the inherited IRA rules are fully in force and that missed RMDs may trigger penalties unless corrected.

Special Rules for Certain Beneficiaries

Surviving spouses

Spouses generally have the most flexibility. In many cases, a surviving spouse can either:

Roll the IRA into their own account and delay RMDs until their own required age

Keep the IRA as an inherited account and take distributions under beneficiary rules.

The best option often depends on age, income needs, and tax planning goals.

Minor children

A minor child of the original owner is treated differently while they are under the age of majority. During that time, withdrawals may be based on life expectancy. Once the child reaches the applicable age (generally 21), the 10-year rule begins.

Trusts, estates, and charities

If an IRA is left to a trust, estate, or charity, different and often more restrictive rules may apply. These situations typically require careful coordination with legal and tax advisors.

Planning Opportunities and Potential Pitfalls to Consider

Given the complexity around inherited IRA RMDs, thoughtful planning matters more than ever. Here are some considerations:

• Communicate with heirs: Discuss the implications of inherited IRAs with beneficiaries so they are prepared for the financial responsibilities.
• Beneficiary designations matter: How an IRA is left can dramatically change how and when taxes are paid.
• Timing matters: Waiting until year 10 can create a large tax bill in a single year.
• Taxes stack: Inherited IRA income can push beneficiaries into higher tax brackets or affect Medicare premiums.
• Optimize for tax efficiency: Work with experienced financial and tax advisors to optimize your estate for tax efficiency, potentially leveraging trusts or other vehicles to manage the tax burden.

The Key Takeaway: It’s Complicated

Inherited IRAs are no longer “set it and forget it” assets. Current rules require beneficiaries to pay closer attention, make intentional withdrawal decisions, and coordinate inherited IRA distributions with the rest of their financial picture. The stakes remain high, particularly for families navigating large retirement account transfers.

Understanding the rules before a distribution deadline arrives can help reduce taxes, avoid penalties, and make a difference in how wealth is passed from one generation to the next.

We are here to help. Please connect with us for guidance specific to your situation.

This article reflects federal rules in effect as of December 2025 and may change with future guidance or legislation. Regulations in this area have been revised several times.

References:

• Retirement topics - Beneficiary
• Release: Quarterly Retirement Market Data, Second Quarter 2025