Glossary
Ten-year rule
Definition
The ten-year rule requires most non-spouse beneficiaries who inherit a retirement account after 2019 to empty it by the end of the tenth year after the owner's death. If the owner had begun RMDs, annual distributions are generally required in the meantime too.
How ten-year rule works
The SECURE Act replaced the 'stretch' for most beneficiaries with this ten-year window. Eligible designated beneficiaries (spouses, minor children of the owner, disabled or chronically ill people, and those not more than ten years younger) can still use life-expectancy payments.
Planning the withdrawals across the ten years, around the beneficiary's own income, can save significant tax.
Why it matters to a firm
Adult children inheriting IRAs in peak earning years need a withdrawal plan, and they are often new clients.
Calculators that use ten-year rule
Questions about ten-year rule
Do spouses follow the ten-year rule?
No, spouses have other options, including treating the IRA as their own.
Are annual RMDs needed?
If the owner had started RMDs, generally yes.
Does it apply to inherited Roth IRAs?
Yes, though withdrawals are typically tax-free.
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Related terms: Required minimum distribution
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