7 Proven Ways to Handle the SECURE Act 10-Year Rule

What the SECURE Act 10-Year Rule Means: In Plain English

The SECURE Act changed how most non-spouse heirs take money from inherited IRAs and employer plans. If you’re a “non-eligible designated beneficiary,” you generally must empty the account by the end of the tenth year following the original owner’s death. Some heirs still qualify for longer “stretch” payouts; many do not.

Two details drive your plan: (1) whether the original owner died before or after their Required Beginning Date (RBD) for required minimum distributions, and (2) whether the account is traditional or Roth. Under final IRS rules effective for 2025, if the decedent died on or after their RBD, annual beneficiary RMDs are required in years 1–9 and the account must still be emptied by year 10. If the decedent died before the RBD (including all Roth IRA owners) no annual years 1–9 withdrawals are required. Because guidance has evolved, verify current IRS rules for your specific year of inheritance before acting.

Who Is Affected vs. Who Gets Exceptions

Many heirs fall under the 10-year clock. However, “Eligible Designated Beneficiaries” (EDBs) may still use life-expectancy (“stretch”) payouts. Use this quick overview to see where you fit.

Strategy 1: Map Your Status and Deadlines Under the SECURE Act 10-Year Rule

Before touching the money, confirm your category and timeline. That single step cuts mistakes and gives you more control over taxes and cash flow.

• Confirm beneficiary type. Are you an EDB or a standard beneficiary? This choice sets the payout schedule.
• Note the owner’s RBD status. If the owner died on or after their RBD, annual beneficiary RMDs apply in years 1–9 in addition to emptying the account by year 10. If the owner died before RBD (including all Roth owners), annual years 1–9 withdrawals aren’t required.
• Title the account correctly. Use the decedent’s name for the benefit of the beneficiary to preserve tax status.
• Split accounts when there are multiple heirs. To use “separate account” rules, set up individual inherited IRAs by December 31 of the year after death.
• Create a simple timeline. Mark key deadlines now so you’re not scrambling in year 10.

Strategy 2: Build a 10-Year Withdrawal Plan to Manage Brackets

Once you know you’re under the SECURE Act 10-year rule, design withdrawals to minimize lifetime taxes, not just this year’s bill. Consider your income path, filing status, state taxes, and any Medicare-related thresholds.

How to Design Withdrawals

1. Project income for years 1–10. Include wages, pensions, Social Security, your own RMDs, and expected capital gains.
2. Identify “low-tax” windows. Retirement gaps, sabbaticals, or high-deduction years can fit larger distributions at lower rates.
3. Avoid bracket creep and surtaxes. IRA withdrawals can raise Medicare IRMAA premiums and increase the taxable portion of Social Security.
4. Coordinate withholding. Use voluntary withholding to prevent underpayment penalties.

Often, steady withdrawals over 10 years reduce risk versus taking everything in year 10. However, if you expect much higher income soon, front-loading can still win. Run both versions and compare.

Quick Case Study: $600,000 Inherited IRA

Emma, 58, inherits a $600,000 traditional IRA and retires in year 3. If she waits and withdraws everything in year 10, she may hit top brackets and face higher Medicare premiums for two years. Instead, she uses level annual withdrawals across the decade, filling mid-level brackets before retirement and slightly larger amounts afterward. Her lifetime tax bill is lower, and she avoids IRMAA surcharges in several years.

Sample 10-Year Distribution Pattern (Illustrative)

*Balances are simplified and illustrative; actual results depend on investment returns, fees, and tax timing.

Strategy 3: Use Roth Conversions (Owner Strategy) to Help Heirs

If you’re the original account owner, consider partial Roth conversions while you control the timetable. Converting in lower-income years can reduce the tax hit your heirs face under the SECURE Act 10-year rule.

• Start the five-year clock. Opening or funding a Roth (via contribution or conversion) starts the 5-year period measured from January 1 of the first Roth tax year. If that period is satisfied before death, heirs’ distributions of earnings are generally tax-free.
• Fill specific brackets. Many retirees convert up to the top of a chosen bracket each year to balance taxes now versus later.
• Mind cash for the tax. Paying conversion tax from taxable accounts preserves more Roth value for heirs.
• State taxes matter. If you plan to move to a higher-tax state, consider converting before the move.

Roth assets still face the 10-year clock for most heirs, but distributions are typically income-tax-free. That gives growth up to a decade to compound after your death.

Strategy 4: Pair Charitable Tools With the 10-Year Clock

Charitable planning works well with retirement accounts. IRAs are fully taxable to heirs but tax-free to qualified charities.

Qualified Charitable Distributions (QCDs)

• For owners age 70½+: You can make qualified charitable distributions directly from an IRA up to $108,000 in 2025 (indexed annually). QCDs can satisfy all or part of your RMD and are excluded from income.
• For beneficiaries age 70½+: QCDs from an inherited IRA are permitted when the beneficiary is at least 70½ and the charity qualifies; the transfer must go directly from the IRA to the charity.

Charitable Beneficiaries and CRTs

• Name a charity as beneficiary. Leaving a portion (or all) of an IRA to charity avoids income tax on that portion entirely.
• Charitable Remainder Trust (CRT): For very large balances and heirs who need income, a CRT can mimic a “stretch-like” stream while leaving the remainder to charity. Careful drafting and analysis are required.

These tools can reduce the tax drag of the SECURE Act 10-year rule while supporting causes you care about. Keep beneficiary designations current.

Strategy 5: Name (and Update) Beneficiaries With Precision

Strong beneficiary designations are the backbone of SECURE Act planning. The right structure improves control, timing, and taxes.

• Prefer people over estates. Naming an estate often triggers less favorable rules.
• Use per stirpes when appropriate. If a beneficiary predeceases you, their share can pass to their children.
• Use separate accounts. Create separate inherited IRAs for each beneficiary so each person can plan independently within the 10-year window.
• Review after life events. Marriage, divorce, births, deaths, and moves are all reasons to update.

Strategy 6: Trusts Under the SECURE Act 10-Year Rule: Handle With Care

Trusts can protect heirs, but they add complexity under the SECURE Act. Some trusts send distributions right out to beneficiaries (“conduit”); others can retain funds (“accumulation”). Each type interacts differently with the 10-year rule and compressed trust tax brackets.

• See-through status matters. To access more favorable beneficiary rules, a trust must qualify as a “see-through” trust.
• Conduit trusts: May force IRA payouts straight to the beneficiary. That can reduce protection but simplify taxes.
• Accumulation trusts: Can hold distributions, but income is taxed at high trust rates quickly. Drafting and timing matter.
• Align with goals. If control or protection is paramount (creditors, spendthrifts, special needs), a trust can still be right. Just plan for the 10-year clock.

Coordinate your attorney, financial planner, and tax professional. Language in older trusts may conflict with current rules; amending now can prevent future headaches.

Strategy 7: Coordinate With Medicare, Social Security, and State Taxes

Distributions from inherited IRAs can ripple through your entire financial picture. A good plan watches the thresholds that matter in retirement.

• Medicare IRMAA: Higher modified AGI can raise Medicare Part B and D premiums two years later. Smooth distributions to avoid spikes.
• Social Security taxation: IRA withdrawals can increase the portion of Social Security that’s taxable. Model the combined effect.
• State income taxes: Some states fully tax IRA distributions; others do not. Consider timing around moves or partial-year residency.
• Capital gains planning: While IRA withdrawals are ordinary income, they can push capital gains into higher brackets. Be mindful of timing in taxable accounts.

Common Mistakes Under the SECURE Act 10-Year Rule

• Waiting until year 10 without modeling. This can push you into top brackets and trigger IRMAA surcharges.
• Ignoring the decedent’s RBD status. If year-by-year requirements apply in years 1–9, missing them can lead to penalties.
• Forgetting to retitle properly. Incorrect titles can cause immediate taxation or disqualification.
• Using the estate as beneficiary by default. Estates and some trusts can face less favorable timelines.
• Not coordinating with Social Security. Withdrawals can increase the taxable portion of benefits unexpectedly.
• Overlooking state tax differences. A change of residence can meaningfully alter the after-tax result.

Compliance & Timing: Year-by-Year Checklist for the 10-Year Clock

1. Year 0 (owner’s death): Contact custodians; confirm beneficiary status; ensure the owner’s year-of-death RMD (if any) is satisfied. Then retitle the account as an inherited IRA and arrange future distributions from the inherited account.
2. By Dec 31 of Year 1: Confirm proper retitling; create separate inherited IRAs for multiple beneficiaries, if needed.
3. Years 1–3: Build your initial withdrawal map under the SECURE Act 10-year rule. Verify any interim distribution requirements tied to RBD.
4. Years 4–7: Reassess brackets each year; coordinate with Roth conversions in your own accounts if helpful.
5. Years 8–9: Track the remaining balance against key thresholds; avoid a concentrated year-10 distribution unless clearly optimal.
6. Year 10: Distribute any remaining balance by December 31. Confirm withholding and estimated payments to avoid penalties.

Special Notes on Roth IRAs and the SECURE Act 10-Year Rule

Roth IRAs are powerful here. Most non-spouse heirs still face the 10-year clock, but because Roth owners have no RBD, heirs generally don’t have annual years 1–9 RMDs. Qualified Roth distributions are income-tax-free, allowing the account to grow for up to a decade after your death and then be distributed without increasing the heir’s ordinary income.

• Owners: Convert earlier to start the five-year clock and reduce heirs’ future tax burden.
• Heirs: Confirm the decedent’s Roth met the five-year requirement; if not, plan distributions accordingly.

Putting It Together: Two Brief Scenarios

Scenario A: Planning Ahead as the Owner

James, 72, expects to leave an $800,000 traditional IRA to two adult children in high-tax states. He converts $80,000 to Roth each year for seven years, paying the tax from a brokerage account. He also updates beneficiaries to “per stirpes” and names separate contingent beneficiaries for grandchildren. Finally, he leaves 10% of the IRA to a favorite charity.

When he dies, his children inherit a smaller traditional IRA and a sizable Roth IRA, while the charity receives its share tax-free. The kids use level withdrawals within their 10-year windows and keep IRMAA surcharges in check.

Scenario B: Acting Wisely as the Beneficiary

Linda, 65, inherits a $350,000 IRA from her brother, who died after his RBD. She already has Social Security and a modest pension. Instead of delaying, Linda takes measured withdrawals across years 1–9, coordinating with her advisor to keep AGI under key IRMAA thresholds. In year 10, she empties the remainder. Her total taxes are lower than if she had waited and taken one large distribution in the final year.

FAQs: Quick Clarifications on the SECURE Act 10-Year Rule

Do I have to take withdrawals every year?

Under final IRS rules effective for 2025, non-eligible designated beneficiaries must take annual RMDs in years 1–9 if the original owner died on or after their RBD. If the owner died before RBD, or the account is a Roth IRA, annual years 1–9 withdrawals aren’t required, but the account must still be emptied by the end of year 10.

Can I do a 60-day rollover with an inherited IRA?

Correct: non-spouse beneficiaries can’t roll over amounts into or out of an inherited IRA. Only trustee-to-trustee transfers to another properly titled inherited IRA are permitted.

What about inherited employer plans?

Similar 10-year concepts often apply, but plan documents can differ. Rolling to an inherited IRA is common for flexibility. Coordinate the move with the plan administrator first.

Are beneficiary RMD penalties waived if I make a mistake?

IRS Notices 2022-53, 2023-54, and 2024-35 waived excise taxes for certain missed beneficiary RMDs tied to the 10-year rule for 2021–2024. Beginning in 2025, normal rules apply and missed RMDs generally face a 25% excise tax (reducible to 10% if corrected within the allowed window).

Does the SECURE Act 10-year rule apply to inherited Roth IRAs?

Usually yes for non-spouse heirs. However, because the owner had no RBD, annual years 1–9 withdrawals aren’t required. Qualified Roth distributions are tax-free, allowing the balance to grow for up to 10 years before the account must be emptied.

Key Takeaways

• The SECURE Act 10-year rule compresses the payout window for most heirs, but you can still plan your taxes.
• Mapping your status, creating a measured withdrawal plan, and watching Medicare and Social Security thresholds can meaningfully reduce lifetime taxes.
• Roth conversions, QCDs, and precise beneficiary designations are high-impact tools for owners who want to help heirs.
• Trusts can protect, but they require careful drafting to work with the 10-year clock.
• Because guidance evolves, verify current rules and coordinate with a qualified tax professional.

Educational only. This is not tax or legal advice. Confirm details with your advisor based on your exact facts and the current IRS guidance for inherited retirement accounts and the SECURE Act 10-year rule.