Last reviewed: August 2026
An inherited IRA carries an annual RMD requirement when the person you inherited from had already reached their required beginning date and started taking their own required minimum distributions before they died. If that describes your situation, you cannot let the account sit untouched for a decade and drain it at the buzzer. You owe a withdrawal in years one through nine, and the account must still be emptied by the end of year ten. Skip those yearly withdrawals and the inherited IRA annual RMD requirement quietly turns into a tax bill and a penalty most beneficiaries never see coming.
Key Takeaways
- An inherited IRA only forces annual distributions in years one through nine when the original owner died on or after their required beginning date.
- Most non-spouse beneficiaries must still empty the account within 10 years of the owner's death, whichever version of the rule applies.
- Skipping a required distribution triggers an IRS excise tax of 25% of the shortfall, cut to 10% if you correct it within two years.
- Ask one question first: had the person you inherited from already switched on their own required distributions before they passed?
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has helped families across Harford County and the Baltimore metro area untangle inherited retirement accounts since earning his CFP® certification in 2013, using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "The beneficiaries who get hurt here are almost never careless," Jeff says. "They inherited a rule nobody handed them the instructions for, and by the time they call me, we are playing catch-up on a clock that already started."
What does the inherited IRA 10-year rule actually require?
The SECURE Act rewrote the rules for anyone who inherits a retirement account from someone who died after 2019. Before that law, most beneficiaries could stretch distributions over their own life expectancy, sometimes for 30 or 40 years, which kept the yearly tax hit small. Congress ended the stretch for most heirs because it was delaying tax revenue for decades at a time.
Under the current 10-year rule, most non-spouse beneficiaries, whom the IRS calls non-eligible designated beneficiaries, must fully distribute an inherited IRA by the end of the tenth calendar year after the original owner's death. So far this matches the version most people have heard: ten years, one deadline, empty the account by the end. We cover why the IRS runs a clock on an inherited IRA and the broader required minimum distribution rules separately.
Who counts as an eligible designated beneficiary? A surviving spouse, a minor child of the original owner until they reach adulthood, someone who is disabled or chronically ill, and a beneficiary who is not more than 10 years younger than the owner. Those groups can still stretch distributions over their own life expectancy, close to how things worked before 2020. If none of them describe you, the ten-year clock is yours, and so is the fine print inside it.
When does an inherited IRA annual RMD requirement kick in?
Whether you owe the IRS anything before year ten comes down to one fact almost nobody asks about at the start: had the original owner already begun their own required distributions before they died? If yes, you have to take annual distributions in years one through nine, sized off your own single life expectancy, on top of emptying the account by year ten. If the owner had not yet reached their required beginning date, you get the flexibility most people picture: withdraw on whatever schedule fits your tax situation, as long as the account is empty by year ten.
| Situation | Annual RMD in years 1-9? | Deadline to empty the account |
|---|---|---|
| Original owner died on or after their required beginning date | Yes, sized off your single life expectancy | End of the 10th year after death |
| Original owner died before their required beginning date | No, withdraw on any schedule you choose | End of the 10th year after death |
Take a client we will call Robert, who inherited roughly $650,000 from his mother. She had been taking distributions for years before she died, which put Robert on the annual schedule from day one. Contrast that with Elena, who inherited a similar account from a father who died at 61, before his own distributions would have started. Same 10-year rule, same account type, two completely different obligations, and nothing on the statement tells you which one you got.
"The first thing I ask any new inherited-IRA client is whether the person they inherited from had already turned on required distributions before they passed."
Jeff Judge, CFP®
The yearly amount is not a guess. It is your prior year-end balance divided by a factor from the IRS single life expectancy table, and the factor for a 73-year-old is 24.6. If you want to see the arithmetic step by step, our walkthrough on how RMDs are calculated covers it.
What does missing those annual distributions cost?
Two things happen when the required annual distributions get skipped, and neither shows up right away. The first is a tax problem. Every dollar that should have come out in years one through nine but did not is still sitting in the account, still taxable as ordinary income later. Catch the mistake in year seven and those skipped distributions do not disappear. They get made up, often bunched into the same short stretch that was supposed to spread the tax out, which is exactly what the beneficiary was trying to avoid.
What is the penalty for a missed inherited IRA RMD? The IRS can charge an excise tax of 25% of the amount you should have withdrawn and did not, reduced to 10% if you correct the shortfall within a two-year window. On a five-figure missed distribution, that is real money, stacked on top of the income tax already owed on the withdrawal itself. It is also why waiting until year 10 to act is often a tax disaster rather than a convenience.
Jeff Judge has walked more than one beneficiary through a year-seven discovery, where three or four skipped distributions all have to come out at once. The math gets less forgiving the closer you are to year ten, because the missed amount plus whatever is left all has to land in the time you have before the account must be empty. Time inside the window is the one resource that does not come back.
How do you find out which version of the rule applies to your account?
Start with the calendar. Under current law, most IRA owners must begin required distributions by April 1 of the year after they turn 73. If the person you inherited from had already passed that point and was taking distributions, you are almost certainly on the annual schedule. If they died before it, you likely have the open-ended flexibility instead.
Three places settle the question. The original owner's final tax return shows whether they reported IRA distributions in their last years. The custodian holding the account, whether a brokerage or a bank trust department, keeps a full distribution history. And any advisor who managed the account before it transferred can usually answer in under a minute. That first question is really the Review and Recognize step in practice. The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. Getting one fact straight at the start keeps the other five steps from being built on a wrong assumption.
Once you know your track, the planning changes shape. On the annual schedule, the work is sizing each distribution around the rest of your income so no single year spikes. With genuine flexibility, the work is choosing which years to accelerate or defer based on your actual bracket. Either way, get the answer in writing, not just in memory, especially when siblings inherit from the same parent and each makes separate decisions.
How does Maryland's estate and inheritance tax change the picture?
For families here in Harford County and across the Baltimore metro, an inherited IRA does not sit in a vacuum. Maryland is one of only a couple of states with both an estate tax and a separate inheritance tax, and a large retirement account can pull an estate into the first and the beneficiary into the second. The Maryland estate tax applies to estates above a $5 million exemption that is not indexed for inflation, so a sizable IRA can be the asset that tips an estate over the line.
The inheritance tax is the piece more people miss. Maryland charges a 10% inheritance tax on property passing to collateral heirs, meaning a niece, nephew, cousin, or friend, while lineal heirs such as children, grandchildren, and parents, along with siblings, are exempt. If you inherited an IRA from an aunt rather than a parent, that 10% can land on top of the federal and state income tax on every distribution. This is exactly the kind of overlap I sit down and map out with clients from our Forest Hill office, because the annual RMD schedule and the Maryland tax layer interact in ways a single statement never shows. Our goal is to help manage that combined exposure, not to promise it away.
Frequently Asked Questions
Does every inherited IRA require annual distributions?
No. An inherited IRA only requires annual distributions in years one through nine when the original owner died on or after their required beginning date and was already taking their own RMDs. If the owner died before that date, you can withdraw on any schedule you choose, as long as the account is empty by the end of the tenth year.
What happens if I miss a required distribution from an inherited IRA?
You face an IRS excise tax of 25% of the amount you should have withdrawn, reduced to 10% if you correct it within a two-year window. The skipped distribution does not vanish either. It still has to come out, often bunched with later years, which can push a beneficiary into a higher bracket in a single tax year.
How is the annual inherited IRA RMD amount calculated?
Divide the prior December 31 account balance by a life expectancy factor from the IRS single life expectancy table, which for a 73-year-old is 24.6. The factor is set in the first distribution year and then reduced by one each following year, so the required amount generally rises over the decade even if the balance stays flat.
Who is completely exempt from the 10-year rule?
Eligible designated beneficiaries are exempt from the ten-year payout. That group includes a surviving spouse, a minor child of the original owner until adulthood, a beneficiary who is disabled or chronically ill, and anyone not more than 10 years younger than the owner. These beneficiaries can generally stretch distributions over their own life expectancy instead.
Does the 10-year rule apply to an inherited Roth IRA?
Yes, a non-spouse beneficiary must still empty an inherited Roth IRA within ten years. But because Roth owners are never in required-distribution status during life, there is no annual RMD requirement in years one through nine, so you can wait until year ten. Qualified Roth distributions are also generally income-tax-free to the beneficiary.
Does Maryland tax an inherited IRA?
Maryland taxes distributions from an inherited traditional IRA as ordinary state income in the year you take them. On top of that, if you are a collateral heir such as a niece, nephew, or friend, Maryland's 10% inheritance tax can apply to the account, while children, grandchildren, parents, and siblings are exempt from that inheritance tax.
The Bottom Line
If you inherited a retirement account in the past few years and nobody has confirmed whether the inherited IRA annual RMD requirement applies to it, that is worth a short conversation now, before another year quietly slips past the lower penalty window. Jeff Judge and the Chesapeake team serve families and business owners across Harford County and the Baltimore metro. Schedule a free fit call to confirm which version of the rule applies to your account.
A version of this article was originally published on Chesapeake Financial Planners' LinkedIn.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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