When a loved one leaves you an IRA, it’s not just a generous gift—it also comes with some important rules. Thanks to the SECURE Act (passed in 2019), the rules around inherited IRAs changed significantly, especially for non-spouse beneficiaries. One of the biggest changes? The 10-Year Rule.
Here’s a breakdown of what it means and how it might affect you:
What Is the 10-Year Rule?
If you inherit an IRA from someone who wasn’t your spouse, the SECURE Act generally requires that you withdraw the entire balance of the inherited account within 10 years of the original owner's death.
This applies to both traditional and Roth IRAs, and the idea is simple: the funds can’t stay in the account indefinitely. While you aren’t required to take distributions every year, the full amount must be withdrawn by the end of the 10th year.
What About Required Minimum Distributions (RMDs)?
This part can get a little tricky.
If the original IRA owner had already begun taking RMDs before they passed away, you—the non-spouse beneficiary—might have to continue taking RMDs during the 10-year window.
In other cases, especially if the original owner hadn’t started RMDs yet, you may have the flexibility to wait until the 10th year to withdraw the full amount. But tax implications could be steep if you delay and then withdraw a large lump sum all at once.
Every situation is a little different, so it's smart to consult a professional to determine the required timing for your specific case.
Are There Exceptions to the Rule?
Yes! Some beneficiaries aren’t subject to the 10-year withdrawal rule. These include:
Surviving spouses
Minor children of the original account owner (until they reach the age of majority)
Individuals who are disabled or chronically ill
Beneficiaries not more than 10 years younger than the original account owner
These individuals may be able to take distributions based on their life expectancy instead of following the 10-year rule.
Can You Roll Over the Inherited IRA Into Your Own?
No. If you're a non-spouse beneficiary, you cannot roll the inherited IRA into your own IRA, and you cannot make additional contributions to the inherited account.
This means you must manage it separately and follow the distribution rules that apply to inherited accounts.
Why This Matters
Inherited IRAs can come with big tax considerations, especially if you’re withdrawing large amounts in a short time. The 10-Year Rule may compress your tax burden into a smaller window, pushing you into a higher tax bracket if not carefully planned.
Working with a financial advisor can help you:
Strategically time your withdrawals
Mitigate the tax impact
Understand your obligations under current IRS guidance
Coordinate inherited IRAs with your broader financial plan
Let’s Talk Through It
If you've inherited an IRA or think you may in the future, we're here to help you navigate the rules, avoid missteps, and make confident decisions. At Flagship Financial Advisors, we guide clients through every stage of life—including the complex transitions that come with inheritance.
Want to talk through your options? Let’s schedule a short call to walk through what’s next.