Stretch IRA SECURE Act 10-Year Rule
SECURE Act (2020) killed stretch IRA for most non-spouse beneficiaries. Must drain within 10 years. Spouses, minors, chronically ill exempted.
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The SECURE Act of 2020 eliminated the 'stretch IRA' for most non-spouse beneficiaries. Inherited IRAs must now be fully drained within 10 years of the original owner's death. This dramatically accelerates tax liability compared to the old lifetime stretch rules.
Who's Subject to 10-Year Rule
Non-spouse beneficiaries who are NOT: minor children (until age of majority), disabled, chronically ill, or within 10 years of the deceased's age. Most adult children, friends, and unrelated heirs fall under the 10-year rule.
Strategic Withdrawal Timing
Even withdrawals (1/10 each year): smoothest tax. Lump-sum year 10: maximum tax-deferred growth but biggest tax hit. Front-load: pay tax now if you expect higher rates later (TCJA sunset / OBBB cleanup uncertainty).
IRS Final Regulations (2024)
July 2024 IRS final rules: if original owner died after their RMD age (73+), beneficiaries must take ANNUAL RMDs in years 1-9 AND empty by year 10. Pre-RMD-age deaths: no annual RMD, just empty by year 10.
Tax Bracket Planning
Spreading the inheritance avoids pushing yourself into a higher bracket. A $500K inherited IRA pulled lump sum could push a 22%-bracket filer into 32% or 35% range. Even withdrawals save 5-15% in effective tax.
Last updated May 2026. Sources: IRS Notice 2024-35, SECURE Act Inherited IRAs.