Inherited an IRA? The 10-Year Rule Could Cost You Big Time
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By Dana George – Apr 27, 2026 at 6:19AM ESTKey PointsThe 10-year rule is part of the SECURE Act and affects IRA beneficiaries.The rule makes it more difficult to use the funds you've inherited as you wish. Some beneficiaries are exempt from the 10-year rule.When a person dies, they often leave an inheritance to the people they loved most. However, some inheritances come with more strings than others -- not due to any decisions the recently deceased made, but due to changes in the law. For example, if you've inherited an individual retirement account (IRA), the new 10-year rule could become a thorn in your side in at least three ways. Here, we explain the new law and break down how you're likely to be affected by it. Image source: Getty Images. The 10-year rule During his first term in office, President Donald Trump signed the SECURE Act, which contained several amendments to the Internal Revenue Code of 1986. One of those amendments involves inherited IRA rules. 1. You have a strict deadline According to the 10-year rule, you must withdraw all funds from the IRA by Dec. 31 of the 10th year following the year the original owner died. The tricky part is figuring out how to save on taxes. For example, you can decide to take nothing until the 10th year, giving the account more time to grow. However, withdrawing it all in year 10 can lead to a nightmare tax bill and even push you into a higher tax bracket. 2. You lose flexibility Prior to the SECURE Act, many IRA beneficiaries could stretch those distributions out over their lifetime, subject to smaller required minimum distributions. Not only did this help with budgeting, it also often allowed for smaller, more manageable withdrawals. 3. It may affect your investment strategies With a more limited timeframe in which to withdraw money from an IRA, you may feel pressure to sell investments at the wrong time, potentially missing out on growth opportunities or running into losses when the market is depressed. Exceptions to the 10-year rule Fortunately, not everyone must adhere to the 10-year rule in the same way. There are six key exceptions, including: Surviving spouse: The legal spouse of the decedent can use what's called the "life expectancy method" or roll the IRA into an account in their own name. Minor children: Children of the original account holder can take withdrawals using life expectancy tables until they reach age 21, after which the 10-year rule kicks in. Disabled beneficiaries: If they meet the IRS-defined criteria for a disabled person, they can stretch their withdrawals over their life expectancy. Chronically ill beneficiaries: Like disabled beneficiaries, if a chronically ill person meets the IRS-defined criteria, they can stretch their withdrawals out over their life expectancy. Certain trusts: Trusts created for the benefit of disabled or chronically ill people are also exempt from the rule. Beneficiaries not more than 10 years younger: A person who is older, the same age, or less than 10 years younger than the decedent is exempt from the 10-year rule. If you're not exempt from the 10-year rule The fact that someone cared about you enough to leave you an inheritance is a lovely thing, but putting the inheritance to the best use may require a bit of strategy. Once you learn you're the beneficiary of an IRA and know how much is in the account, meet with a financial advisor to set up a withdrawal plan that minimizes your tax burden as much as possible.Read NextApr 27, 2026 •By Matt Frankel, CFPMedicare Premiums Took Back Nearly a Third of the 2026 COLA. What About 2027?Apr 27, 2026 •By Maurie BackmanHere's How You Can Work While Collecting Social Security Without Losing BenefitsApr 27, 2026 •By Maurie BackmanI'm Retiring With $200,000. How Do I Not Run Out of Money?Apr 26, 2026 •By Maurie BackmanThis Key Roth Conversion Move Could Save You Hundreds of Thousands of DollarsApr 26, 2026 •By Stefon WaltersThe RMD Mistake Costing Retirees More Than They Realize -- and How to Fix ItApr 26, 2026 •By Selena MaranjianGas Prices Jumped 21% in March. Here's How That Could Raise Your Social Security Benefit Next Year.About the AuthorDana George is a contributing retirement and Social Security expert at The Motley Fool. Previously, Dana spent five years writing for Motley Fool Money and 20 years as a newspaper reporter. She is also the author of four published novels. She holds a bachelor’s degree in business management from Spring Arbor University. .TMFByGeorge