Stretch IRA Rules 2026: What Beneficiaries Need to Know
How the SECURE Act changed inherited IRA distribution rules and what options remain.
Key Takeaways
- 1The traditional "stretch IRA" ended for most beneficiaries in 2020 (SECURE Act)
- 2Most non-spouse beneficiaries must empty inherited IRAs within 10 years
- 3Eligible Designated Beneficiaries (EDBs) can still stretch over their lifetime
- 4EDBs include: surviving spouses, minor children, disabled/chronically ill, and those not more than 10 years younger
- 5Spousal beneficiaries have the most flexibility - can treat as own IRA
- 6The 10-year rule has no required annual distributions (but must empty by year 10)
- 7Roth inherited IRAs also subject to 10-year rule but distributions are tax-free
What Was the Stretch IRA?
Before 2020, inherited IRAs offered powerful tax deferral:
- **Lifetime stretch** - Beneficiaries could take RMDs over their own life expectancy
- **Decades of tax deferral** - A 30-year-old inheriting could stretch distributions over 50+ years
- **Minimized annual taxes** - Small required distributions meant small tax bills
- **Powerful estate planning tool** - Multi-generational wealth transfer
- **Ended by SECURE Act** - Effective for deaths after December 31, 2019
Current Inherited IRA Rules (Post-SECURE Act)
The rules now depend on your relationship to the deceased:
| Beneficiary Type | Distribution Rule | RMDs Required? |
|---|---|---|
| Spouse | Multiple options (see below) | Depends on choice |
| Minor child of deceased | Stretch until 21, then 10-year rule | Yes, annually |
| Disabled/chronically ill | Lifetime stretch | Yes, annually |
| Not more than 10 years younger | Lifetime stretch | Yes, annually |
| All other individuals | 10-year rule | No (just empty by year 10) |
| Non-designated (estate, charity) | 5-year rule | No (empty by year 5) |
The 10-Year Rule Explained
Most non-spouse beneficiaries face this rule:
- **Must empty the account within 10 years** of the original owner's death
- **No required annual distributions** - Take it all in year 1 or year 10, your choice
- **Applies to Traditional and Roth** - But Roth distributions are tax-free
- **Clock starts year after death** - If owner died in 2024, account must be empty by end of 2034
- **Accelerated tax impact** - Large distributions may push you into higher brackets
IRS Clarification (2022)
If the original owner was already taking RMDs, beneficiaries may need to take annual RMDs AND empty the account within 10 years. This interpretation is still being finalized.
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Eligible Designated Beneficiaries (EDBs)
These beneficiaries can still stretch over their lifetime:
- **Surviving spouse** - Most flexible options of any beneficiary
- **Minor children of the deceased** - Only until age 21, then 10-year rule kicks in
- **Disabled individuals** - As defined by IRS standards
- **Chronically ill individuals** - Unable to perform daily living activities
- **Individuals not more than 10 years younger** - Siblings close in age, for example
Spouse Beneficiary Options
Surviving spouses have the most flexibility:
| Option | RMD Treatment | Best For |
|---|---|---|
| Treat as own IRA | Your own RMD schedule | If you don't need money now |
| Remain as beneficiary | Based on deceased's age | If under 59½ and need access |
| Roll to own IRA | Same as treating as own | Cleaner account management |
| Disclaim (pass to contingent) | N/A - you give it up | If you don't need the money |
Tax Planning Strategies for the 10-Year Rule
Minimize taxes when subject to the 10-year rule:
- 1**Spread distributions evenly** - Avoid bunching into one high-income year
- 2**Coordinate with other income** - Take more in low-income years
- 3**Consider Roth conversions** (if inherited Traditional) - Pay tax now, avoid future tax
- 4**Use for charitable giving** - QCDs from inherited IRAs (if you're 70½+)
- 5**Fund education expenses** - Offset with education credits/deductions
- 6**Don't wait until year 10** - You may forget or face a high-income year
Don't Miss the 10-Year Deadline
If you fail to empty an inherited IRA within 10 years, the remaining balance is treated as an excess accumulation, potentially subject to a 25% penalty. Mark your calendar for 8-9 years out as a reminder to plan the final distributions.
Inherited IRAs and Gold
If you've inherited a Gold IRA or are considering one for your own estate plan:
- Gold IRAs follow the same inherited IRA rules as traditional IRAs
- Beneficiaries can take in-kind distributions (receive physical gold)
- Physical gold may provide stability during the 10-year distribution period
- Consider converting a portion to gold within an inherited IRA
- Estate planning: Gold IRAs offer tangible assets for heirs
Frequently Asked Questions
1Can I still stretch an inherited IRA over my lifetime?
Only if you're an Eligible Designated Beneficiary (EDB): surviving spouse, minor child of the deceased, disabled, chronically ill, or not more than 10 years younger than the deceased. Otherwise, you're subject to the 10-year rule.
2Do I have to take annual distributions under the 10-year rule?
Generally no - you just need to empty the account by the end of year 10. However, if the original owner was already taking RMDs, you may need to take annual distributions as well (IRS guidance still evolving).
3What happens to the stretch if I inherited before 2020?
If the original owner died before January 1, 2020, you're grandfathered under the old rules. You can continue stretching over your life expectancy. The 10-year rule only applies to deaths after 2019.
4Is an inherited Roth IRA also subject to the 10-year rule?
Yes, the 10-year rule applies to inherited Roth IRAs too. However, qualified distributions from inherited Roth IRAs are tax-free, so the tax impact is much less severe.
5What if I'm a minor child - when does the 10-year rule start?
Minor children of the deceased can stretch until they reach the age of majority (21 in most states for IRA purposes). Then the 10-year clock starts. So a 5-year-old beneficiary would have until age 31 to fully distribute.
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