Inherited IRA 10-Year Rule: Distribution Strategy Calculator

The SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries. If you inherited a traditional IRA or 401(k) from an owner who died after December 31, 2019, you have 10 years to fully drain the account. And since the IRS finalized T.D. 10001 in July 2024, if the original owner was already taking required minimum distributions when they died, you must also take annual minimums in each of the first nine years — or face a 25% excise tax on the shortfall.

This calculator shows your required annual minimums (if applicable) and compares two distribution strategies with estimated taxes — so you can see what deferring distributions to year 10 actually costs versus spreading them evenly.

The 10-year rule explained

Before the SECURE Act (signed December 2019), most non-spouse beneficiaries could take distributions from an inherited IRA over their entire life expectancy — the so-called stretch IRA. A 45-year-old inheriting a $600,000 IRA could spread distributions over 40+ years, deferring taxes while the account compounded.

The SECURE Act replaced the stretch with a hard 10-year deadline. The account must be fully distributed by December 31 of the 10th calendar year following the owner's death. Initially, many advisors assumed this meant no annual requirement — just drain by year 10 however you like. The IRS disagreed.

Required Beginning Date and what it means for you

The owner's RBD is April 1 of the year following the year they turn 73 (for those born before 1960) or April 1 following age 75 (born 1960 or later, per SECURE 2.0). If your benefactor died on or after their RBD — even by one day — the annual minimum rule applies to you.

Your annual required minimum for years 1–9 is:

December 31 prior-year balance ÷ Single Life Table factor

You use the IRS Single Life Expectancy Table (Table I, Treas. Reg. § 1.401(a)(9)-9, updated per T.D. 9977 effective 2022), finding your age as of December 31 of Year 1. Each subsequent year, the factor decreases by 1. Year 10: the entire remaining balance is your required distribution — no factor applies.

Eligible designated beneficiaries: who can still stretch

Five categories of beneficiaries are exempt from the 10-year rule and can still use the Single Life Table stretch over their full lifetime:³

• Surviving spouse — can also treat the inherited IRA as their own, rolling into their own IRA and delaying RMDs to their own RBD
• Minor children of the original owner — can stretch until reaching the age of majority (typically 21), then the 10-year clock starts
• Disabled individuals (per IRC §72(m)(7))
• Chronically ill individuals
• Individuals not more than 10 years younger than the deceased owner — a sibling, close friend, or partner within 10 years of the decedent's age qualifies

If you fall into any of these categories, you may still have a stretch option. A specialist can confirm based on your birth year versus the owner's and your specific circumstances.

Why year-10 deferral is usually expensive

The temptation is to defer: take nothing for nine years, let the account compound, then distribute in year 10. This minimizes early-year tax but creates a problem. A $500,000 inherited IRA growing at 6% becomes roughly $845,000 by year 10. Distributing $845,000 in a single year — stacked on top of Social Security, pension, and any other income — can push a married couple into the 35% bracket and potentially trigger Medicare IRMAA surcharges two years later.

For a beneficiary with $60,000 of other income (MFJ), that year-10 lump distribution could generate $200,000+ in federal and state taxes from a single year's return. Spreading distributions evenly — even just taking balance ÷ 9 remaining years each year — commonly reduces total 10-year taxes by $40,000–$180,000 depending on balance size and other income.

Bracket-filling: the most tax-efficient approach

The optimal distribution strategy for most beneficiaries is bracket-filling: each year, take enough from the inherited IRA to "fill" a target tax bracket without exceeding it — typically the top of the 22% or 24% federal bracket. This requires knowing your total income projection for each year of the window and coordinating the inherited IRA distributions around it.

In years where your other income is lower (before Social Security kicks in at 70, while still partially employed), you can take larger distributions at lower marginal rates. In years where income spikes, pull back. This is difficult to optimize on paper across 10 years of projected income, changing brackets, and an account that's still growing — which is why this audience benefits most from a specialist who models the full schedule.

Sources

1. T.D. 10001 — IRS Final RMD Regulations (July 2024). Confirms annual RMD requirement in years 1–9 when the original account owner died on or after their RBD. Effective for distribution calendar years beginning January 1, 2025.
2. IRS — Required Minimum Distributions for IRA Beneficiaries. 10-year rule for non-eligible designated beneficiaries; eligible designated beneficiary definitions; SECURE Act 2019 changes.
3. IRS Publication 590-B (2025). Table I (Single Life Expectancy) factors used for annual RMD calculation; inherited IRA rules; 10-year rule application and examples.
4. IRC § 4974 — Excise Tax on Missed RMDs. 25% rate on under-distributions (reduced from 50% by SECURE 2.0 § 302); 10% correction rate if corrected within 2-year window.
5. Kiplinger — Annual RMDs Required for Many Inherited IRAs (T.D. 10001). Analysis of final regulations, penalty enforcement timeline, and planning implications.

2026 federal tax brackets and standard deduction verified against IRS Rev. Proc. 2025-32. Single Life Expectancy Table factors from Treas. Reg. § 1.401(a)(9)-9, Table I (updated per T.D. 9977, effective 2022); anchor-point values confirmed via IRS Pub 590-B and Fidelity. Tax values current as of April 2026.