An Inherited IRA Comes With a Ten-Year Clock, and a Ten-Year Choice. She Emptied Hers Across the Two Years She Wasn’t Working.

If you inherit an IRA from a parent, sibling, or friend who passed away after December 31, 2019, there is a rule that most beneficiaries tend to misread. That account has to be completely emptied by the end of the tenth year following the death. But here is where the flexibility actually sits. Nothing in the statute forces the money out evenly, nor does it impose any particular schedule in most cases.

A non-spouse beneficiary can take nothing for nine years and then drain the entire account in year ten, empty it all during a single low-income year, or spread distributions out to fill the bottom tax brackets each year. The ten-year clock functions more like a ten-year choice, and a beneficiary who happens to spend two of those years between jobs can empty the account at a marginal rate that a working year simply would not have allowed.

What the Statute Actually Says

The provision comes from the SECURE Act of 2019, codified at Internal Revenue Code §401(a)(9)(H). It replaced the old “stretch IRA” for most non-spouse heirs. The IRS issued final regulations in July 2024 that took effect for the 2025 distribution year, clarifying two points that had been in limbo: the ten-year deadline is the end of the calendar year containing the tenth anniversary of the original owner’s death, and annual required minimum distributions inside that window apply only when the original owner had already begun taking their own RMDs.

Who Falls Under the Ten-Year Clock

How the Low-Income Year Play Works

Withdrawals from an inherited traditional IRA count as ordinary income. Concentrating them in years of unusually low earnings, a career break, graduate school, parental leave, caregiving, or early retirement compresses the total tax bill. The mechanics are straightforward:

1. The death date and whether the original owner had reached their required beginning date (generally April 1 of the year after turning 73 under SECURE 2.0) determine whether annual RMDs are mandatory in years one through nine.
2. Taxable income can be projected year by year across the ten-year window, flagging the lowest-income years, whether from a planned sabbatical, a return to school, or a gap between roles.
3. Distributions in each low-income year can be sized to fill the current bracket without spilling into the next. Federal withholding can be taken at distribution or through quarterly estimated payments.
4. The balance must reach zero by December 31 of the tenth year after death. Distributions to non-spouse beneficiaries are exempt from the 10% early-withdrawal penalty regardless of age, under IRC §72(t)(2)(A)(ii).

Assets left inside the account during the window can stay invested. With the 10-Year Treasury yielding 4.74% as of August 21, 2026, even conservative allocations can generate meaningful returns before the deadline forces liquidation.

Trap That Can Cost 25% on Top of Income Tax

If the original owner died on or after their required beginning date, the beneficiary must take an annual RMD in years one through nine and empty the account in year ten. Skipping a required distribution triggers a 25% excise tax on the shortfall under SECURE 2.0, dropping to 10% if the missed amount is withdrawn and Form 5329 is filed within the correction window (one of nine IRS rules that quietly drain inherited accounts, all mapped out in a free report here).

The IRS waived enforcement of these annual RMDs for 2021 through 2024 while the regulations were pending, but that grace period ended. 2025 was the first mandatory year, and you must take 2026 distributions by December 31. The ten-year deadline itself is absolute: any dollar left in the account on January 1 of year eleven is subject to the same excise tax on the full remaining balance.

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