The SECURE Act generally eliminated the stretch IRA for most non-spouse designated beneficiaries who inherit after 2019 Most non-spouse beneficiaries must fully distribute the inherited IRA by the end of the 10th calendar year following the year of the owner's death For owners who died before their required beginning date, annual RMDs may not be required during the 10-year window (though the account must still be emptied by year 10) The 10-year rule applies to both traditional and Roth inherited IRAs, though the tax implications differ significantly

Inherited IRA Tax Strategy

Curated by: Rubric Advisors

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The 10-Year Rule

The SECURE Act generally eliminated the stretch IRA for most non-spouse designated beneficiaries who inherit after 2019
Most non-spouse beneficiaries must fully distribute the inherited IRA by the end of the 10th calendar year following the year of the owner's death
For owners who died before their required beginning date, annual RMDs may not be required during the 10-year window (though the account must still be emptied by year 10)
The 10-year rule applies to both traditional and Roth inherited IRAs, though the tax implications differ significantly

Eligible Designated Beneficiaries

Surviving spouses may roll the inherited IRA into their own IRA or remain as a beneficiary, with different distribution rules for each option
Minor children of the deceased may use the life expectancy method until reaching the age of majority, at which point the 10-year clock generally begins
Disabled or chronically ill beneficiaries, as defined under the tax code, may still use the life expectancy stretch method
Beneficiaries who are not more than 10 years younger than the deceased owner may also qualify for the stretch — consult a tax advisor to confirm eligibility

Spouse Beneficiary Options

Rolling an inherited IRA into the surviving spouse's own IRA delays RMDs until the spouse reaches their own required beginning date (currently age 73)
Remaining as a beneficiary may allow the surviving spouse to access funds before age 59½ without the typical 10% early withdrawal penalty
A surviving spouse may also elect the 10-year rule if that approach better fits their tax planning situation
Disclaiming the inheritance to a contingent beneficiary is an option that may be considered within nine months of the original owner's death

Roth Inherited IRA Advantage

The 10-year distribution rule still applies to inherited Roth IRAs, but qualified distributions are generally income tax-free
There are typically no required annual distributions during the 10-year window for inherited Roth IRAs
Beneficiaries may choose to delay distributions until year 10 to maximize the period of tax-free growth within the account
Inherited Roth IRA distributions generally have no impact on the beneficiary's taxable income, which may benefit overall tax planning

Distribution Timing Strategy

Bunching distributions in low-income years (such as during a sabbatical, between jobs, or early retirement) may reduce the overall tax burden
Spreading distributions evenly across the 10-year window may help avoid pushing income into higher tax brackets in any single year
State tax residency at the time of distribution matters — relocating to a lower-tax state before taking large distributions may reduce state taxes
Coordinating inherited IRA distributions with other income sources such as bonuses, stock vesting, or Social Security may improve tax efficiency

Tax Bracket Management

Modeling a 10-year distribution schedule against projected future income can help identify the most tax-efficient withdrawal pattern
Front-loading distributions in early low-income years and delaying in high-income years may reduce cumulative taxes paid
Coordinating Roth conversions of your own IRA while simultaneously taking inherited IRA distributions can be a powerful but complex strategy
Consult a tax advisor to project the impact of different distribution schedules on your marginal tax rate over the full 10-year period

Planning Ahead as the Owner

Reviewing beneficiary designations regularly helps ensure the intended individuals or trusts will receive the account
Account owners may consider Roth conversions before death to leave beneficiaries a tax-free inheritance under the 10-year rule
Naming a trust as beneficiary (conduit vs. accumulation) has significant tax implications and should be evaluated carefully with legal counsel
Per stirpes vs. per capita beneficiary designations determine how assets pass if a named beneficiary predeceases the account owner

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The 10-Year Rule

Eligible Designated Beneficiaries

Spouse Beneficiary Options

Roth Inherited IRA Advantage

Distribution Timing Strategy

Tax Bracket Management

Planning Ahead as the Owner

Related Topics

Inherited IRAs & the SECURE Act 10-Year Rule

Roth IRA Conversion Strategies

Tax Bracket Management & Income Smoothing

The 10-Year Rule

Eligible Designated Beneficiaries

Spouse Beneficiary Options

Roth Inherited IRA Advantage

Distribution Timing Strategy

Tax Bracket Management

Planning Ahead as the Owner

Related Topics

Inherited IRAs & the SECURE Act 10-Year Rule

Roth IRA Conversion Strategies

Tax Bracket Management & Income Smoothing