Inherited an IRA? Here's What You Actually Need to Do About RMDs in 2026

Learn about inherited IRAs, RMDs, and the 10-year rule to manage your inherited account effectively in 2026.

A few months ago, I got a call from a woman I'll call Sandra. Her father had passed away the previous spring, and she'd inherited his traditional IRA. The account was worth just over $400,000. She was thrilled to have the inheritance, of course, but also completely overwhelmed. Her father's financial institution had sent her a packet of documents, and somewhere in that packet was a reference to something called a "10-year rule." She had no idea what it meant, and she was terrified of doing something wrong.

She wasn't alone in that fear. According to the Investment Company Institute (March 2025), about 32.6% of U.S. households, roughly 43.1 million of them, owned a traditional IRA as of mid-2024. That's a lot of families who will eventually be in Sandra's shoes.

So let me answer the core question right up front: if you inherited an IRA from someone who was not your spouse, you are most likely subject to the 10-year rule. That means you must fully empty the inherited account within 10 years of the original owner's death. Whether you also owe annual withdrawals along the way depends on a single critical detail, and I'll walk you through exactly how to figure that out.

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"What exactly is the 10-year rule, and does it apply to me?"

The 10-year rule was introduced under the SECURE Act and governs what are called "non-eligible designated beneficiaries." In plain English, that generally means adult children, grandchildren, siblings, and most other non-spouse heirs. Under final IRS regulations published in July 2024, these beneficiaries must empty inherited accounts within a 10-year window (The Specialist's Desk, March 2026).

If you're a spouse, a minor child of the deceased, someone who is disabled or chronically ill, or someone not more than 10 years younger than the original owner, different rules may apply to you. Those are the "eligible designated beneficiaries," and they have more flexibility. But for the majority of people calling my office, the 10-year rule is the one that matters.

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"Do I have to take money out every year, or just by year 10?"

This is the question that trips people up the most, and the answer hinges on one thing: did the original account owner die before or after their Required Beginning Date (RBD)?

The Required Beginning Date is the deadline by which an account owner must start taking their own withdrawals, called Required Minimum Distributions, or RMDs. Under the SECURE 2.0 Act, that age is now 73 for original account owners (Key Wealth, 2025).

Here's how the two scenarios break down:

If the original owner died before reaching their RBD (i.e., before age 73): You do not have to take annual distributions in years one through nine. You just need to fully empty the account by the end of year 10. You have complete flexibility over the timing.

If the original owner died on or after their RBD (i.e., age 73 or older): You must take annual RMDs in years one through nine AND still fully empty the account by year 10.

Sandra's father had passed away at 76. That meant he had already reached his Required Beginning Date. She was required to take annual distributions, and she needed to act quickly to avoid a penalty.

And those penalties are not small. Missing a required distribution triggers a 25% excise tax on the amount you should have taken but didn't. That rate can drop to 10% if you correct the mistake in a timely manner, but it's still a painful and avoidable hit (Texas Society of CPAs, December 2025).

One important note on penalties: the IRS had waived these penalties for missed annual inherited IRA RMDs from 2020 through 2024. That grace period is over. Strict enforcement resumed for the 2025 and 2026 tax years (What You Need to Know About the 2025 Changes to Inherited IRA Rules, August 2025). If you've been waiting to figure this out, now is the time.

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"How should I spread out my withdrawals over the 10 years?"

This is where financial planning earns its keep.

A lot of people hear "10-year rule" and assume they should just wait until year 10 and take everything at once. That almost always creates a tax disaster. Pulling a $400,000 IRA out in a single year can push you into the highest federal tax brackets and create a cascade of other issues.

Here's some genuinely good news for 2026 planning: the One Big Beautiful Bill Act, or OBBBA, was signed into law in 2025 and made the Tax Cuts and Jobs Act (TCJA) tax brackets permanent. They are not expiring. They are not sunsetting. This matters more than most people realize, because there

had been real uncertainty about whether tax rates would jump in 2026. They won't.

Because the current brackets are now permanent law, you can plan with confidence. The smart strategy for most non-spouse beneficiaries is to spread distributions as evenly as possible across the full 10-year window. By taking consistent, calculated withdrawals each year, you keep your taxable income lower in any single year and avoid unnecessary bracket creep.

I had a client a few years back who inherited a sizable traditional IRA from his aunt. He came in convinced he should "just let it grow" and take everything in year 10. When we ran the numbers, a single-year distribution would have pushed nearly half the account into his highest marginal bracket. By spreading distributions evenly, we saved him tens of thousands of dollars over the decade. Same money, very different outcome.

Every situation is different. Your tax bracket today, your expected income over the next 10 years, whether you're planning to retire or take a sabbatical, all of that feeds into the right withdrawal schedule. This is a planning conversation, not a set-it-and-forget-it decision.

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"What if I inherited a Roth IRA instead?"

Inherited Roth IRAs are subject to the same 10-year depletion rule as traditional inherited IRAs. But there's a meaningful difference: inherited Roth IRAs do NOT require annual RMDs during the 10-year period, regardless of the original owner's age or when they passed away.

That means if you inherited a Roth IRA, you can let the entire account grow tax-free for up to a decade and then take the whole thing out in year 10 without owing a penny in federal income tax, assuming the account meets the qualified distribution rules.

That's a powerful position to be in. If you're fortunate enough to have inherited a Roth, you have both time and tax-free growth on your side. The strategic question becomes whether to take smaller withdrawals along the way for other financial goals or let the account compound as long as possible.

I'll also mention Roth 401(k)s here, because they come up in related planning conversations. Under SECURE 2.0, Roth 401(k)s no longer have RMD requirements during the original owner's lifetime. And unlike Roth IRAs, Roth 401(k)s have no income limits for contributions, making them an attractive option for higher earners who want to build tax-free retirement wealth. If you're still in the accumulation phase and your employer offers one, it's worth a serious look, especially with the 2026 base contribution limit sitting at $24,500 (or $32,500 if you're 50 or older).

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