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How will the 2026 RMD rule changes affect inherited IRAs and beneficiaries?
Executive summary
The IRS finalized inherited-IRA rules after the SECURE Acts that generally force most non-spouse beneficiaries to empty inherited IRAs within 10 years rather than “stretch” over a lifetime; the agency’s guidance clarifies that many beneficiaries must begin annual RMDs (rather than wait) and that the final regulations’ effective application was pushed to the 2026 distribution year (with prior waivers and delays affecting 2020–2025) [1] [2] [3]. Major custodians and tax outlets explain that spouses, certain eligible designated beneficiaries (EDBs) and minor-child exceptions retain more flexible options, but ordinary non-spouse beneficiaries face annual RMDs plus a 10-year overall limit [1] [4] [5].
1. What changed: end of the long “stretch” for most beneficiaries
The SECURE Act [6] and SECURE 2.0 [7] removed the long-standing ability for most beneficiaries to take life‑expectancy RMDs; instead, most non-spouse beneficiaries now must distribute the entire inherited account within 10 years of the owner’s death, and the IRS’s final rules make clear many of those beneficiaries are required to take annual RMDs during that 10‑year window rather than simply waiting until year 10 [1] [8].
2. Timing: why 2026 matters and who was affected before then
The IRS issued final regulations in 2024 but later delayed the regulations’ applicability so they would not apply earlier than the 2026 distribution calendar year; commenters suggested implementation issues, and the IRS told taxpayers to use reasonable, good‑faith interpretations until the final applicability date [2]. Reporting and firm guidance note beneficiaries who inherited since Jan. 1, 2020 often had a de facto pause on RMD enforcement for 2020–2024 but that the expiration of temporary waivers and the IRS clarifications mean annual RMDs and excise‑tax exposure resumed as clarified by the new rules [3] [9].
3. Who still gets flexibility: spouses, certain “eligible designated beneficiaries,” minors
Not everyone faces the 10‑year squeeze. Surviving spouses, minor children (with special life‑expectancy rules until transition ages), disabled or chronically ill beneficiaries, and beneficiaries no more than 10 years younger than the decedent are treated as eligible designated beneficiaries (EDBs) and can generally use life‑expectancy RMD rules rather than the strict 10‑year rule [4] [1]. Spouses also can elect to treat the inherited assets as their own IRA and follow the owner RMD schedule [10] [1].
4. Roth IRAs are not immune to the 10‑year rule
The 10‑year distribution requirement applies to inherited Roth IRAs as well as traditional IRAs; the tax‑free character of qualified Roth distributions remains a factor, but the account is no longer protected inside the tax-advantaged wrapper beyond the 10‑year limit unless an EDB exception applies [1] [11].
5. Practical consequence: earlier and possibly larger taxable income spikes
For traditional IRAs, beneficiaries who must take annual RMDs will realize ordinary income sooner and possibly at higher marginal tax rates than under the old “stretch” rules, and even beneficiaries who could have deferred to a single year‑10 withdrawal now face choices about timing to manage taxes; advisors and custodians recommend modeling distributions for tax optimization because the 10‑year rule compresses timing [12] [13].
6. Confusion, transition relief and enforcement nuances
The IRS and industry coverage note that questions remained about whether beneficiaries had to take annual RMDs during the 10 years or could withdraw everything in year 10; the IRS final rules answered many of those questions but also delayed full applicability to 2026 and told taxpayers to use reasonable, good‑faith interpretations in the interim — creating some relief but also a complex transition for accounts inherited between 2020 and the regulation date [8] [2] [9].
7. What beneficiaries should do now
Custodians and tax publications recommend beneficiaries determine whether they are an EDB (spouse, minor, disabled, chronically ill, or within 10 years younger) and whether the decedent was already taking RMDs, then calculate whether annual RMDs apply or whether the 10‑year rule is the constraint; if uncertain, consult a tax advisor or the IRA custodian because mistakes can trigger excise taxes and because the IRS has signaled both relief and enforcement windows [4] [13] [14].
Limitations and conflicting viewpoints: industry write‑ups (Fidelity, Vanguard, Schwab, Kiplinger) largely agree on the 10‑year rule and the EDB exceptions, but sources differ on emphasis — some stress the IRS’s clarifying rulings requiring annual RMDs for many beneficiaries [8] [1], while others highlight the IRS delay and interim good‑faith guidance that gave taxpayers more time to adapt [2]. Available sources do not mention any 2026 legislative changes to ordinary income tax rates that could affect beneficiary tax outcomes beyond implementation timing (not found in current reporting).