What are the 2026 deadline and distribution timing changes for inherited IRA beneficiaries?
Executive summary
Beginning with the aftermath of the SECURE Acts and clarified by IRS guidance, many non-spouse beneficiaries face compressed timing for inherited IRA withdrawals: most must empty accounts within 10 years and, for a significant subset, must take annual required minimum distributions (RMDs) during that period rather than waiting until year ten — with key implementation timing shifted so some regulatory changes take effect in the 2026 distribution year (Jan. 1, 2026) while others already apply to 2025 tax years [1] [2] [3].
1. The legislative and regulatory backdrop: SECURE, SECURE 2.0 and the 10‑year cap
The SECURE Act of 2019 largely ended “stretch IRAs” for most non‑spouse beneficiaries, imposing a 10‑year rule that generally requires the inherited account to be fully distributed by December 31 of the tenth year after the owner’s death, with narrow exceptions for eligible designated beneficiaries such as surviving spouses, minor children, the disabled, the chronically ill, or beneficiaries within ten years younger than the decedent [1] [4] [5].
2. The big question regulators answered: annual RMDs or a single 10th‑year withdrawal
Final IRS rules clarified whether beneficiaries subject to the 10‑year rule must take annual RMDs within that decade or can defer all withdrawals until the tenth year; the IRS has stated that for many beneficiaries the rules require annual RMDs during the 10‑year span rather than allowing a single lump sum at year ten, resolving long-standing ambiguity that advisers warned could trigger steep excise taxes for missed withdrawals [3] [1].
3. Timing changes and the 2026 effective‑date delay — what applies when
The IRS issued Announcement 2025‑2 extending the anticipated effective date of certain proposed RMD regulations for one year so that several specific regulatory sections (notably sections 1.401(a)‑4, ‑5, and ‑6) are expected to be effective January 1, 2026 (the 2026 distribution calendar year), while other elements of the guidance remained effective earlier; industry groups sought the delay because recordkeepers and plan sponsors needed more time to implement complex changes [2]. Concurrent reporting from financial firms and advisors noted that beneficiaries should still expect the first inherited‑IRA annual RMDs to be due by December 31, 2025 in many cases under the finalized guidance and that RMD calculations for 2026 generally will use the December 31, 2025 account balance [6] [7].
4. Who must take annual RMDs in practice, and how distributions are timed
If the deceased owner had reached RMD age (e.g., age 73 under SECURE 2.0) before death or was already subject to RMD rules, beneficiaries who are not in the narrow eligible designated‑beneficiary categories will generally be required to take annual RMDs during the 10‑year period rather than defer all withdrawals, and the RMD for a given distribution year is calculated using the account balance as of the end of the preceding calendar year divided by the applicable life‑expectancy divisor under IRS tables where lifetime RMDs apply [3] [8] [6]. For example, guidance and practice materials show a 2026 RMD computed using the December 31, 2025 inherited IRA balance and the beneficiary’s life‑expectancy factor [6].
5. Examples, exceptions and practical consequences
Firms such as Fidelity and Vanguard, and tax advisers, emphasize exceptions: surviving spouses often have different choices (including treating the account as their own), certain eligible designated beneficiaries can still use life‑expectancy distributions, and accounts inherited from owners who died before required beginning dates may permit more flexible timing within the 10‑year window; advisers warn beneficiaries that failing to follow the appropriate annual schedule can trigger substantial excise taxes and unwanted income in specific years [7] [9] [1]. The staggered effective dates — some rules functionally in effect for 2025 while technical regulatory provisions were postponed until 2026 — mean beneficiaries, custodians and advisors must pay attention to both the substance of the IRS final guidance and the implementation timeline announced in IRS Announcement 2025‑2 [2] [3].
6. The takeaway for heirs and planners
Beneficiaries should assume the 10‑year cap applies widely and, unless one of the narrow exceptions fits, expect to take annual RMDs during that decade with 2025 and 2026 year‑end balances driving calculations; custodians and advisors remain adjusting systems because some regulatory details were deferred to the 2026 distribution year, so professional tax guidance remains essential to avoid costly errors and to coordinate timing across estate, tax and income planning [1] [2] [7].