What are the inherited IRA rules for 2025?

The rules for inherited IRAs changed dramatically under the SECURE Act (2019) and SECURE Act 2.0 (2022). The rules depend on your relationship to the deceased and when the original owner died.

If the owner died in 2020 or later (post-SECURE Act):

Eligible Designated Beneficiaries (EDBs) can still use the stretch IRA (life expectancy method):

• Surviving spouse
• Minor children of the deceased (until age 21, then the 10-year rule applies)
• Disabled or chronically ill individuals
• Individuals not more than 10 years younger than the deceased

Non-eligible designated beneficiaries (most adult children, friends, etc.) must empty the account within 10 years of the owner's death. The IRS finalized regulations in 2024 clarifying that if the original owner had already begun Required Minimum Distributions (RMDs), the beneficiary must take annual RMDs during the 10-year period AND empty the account by year 10. If the owner died before their RMD required beginning date, no annual RMDs are required during the 10-year window.

Surviving spouse special options:

• Roll the inherited IRA into their own IRA (treat it as their own)
• Remain as beneficiary and take RMDs based on their own life expectancy
• Elect the 10-year rule
• Starting in 2024, elect to be treated as the deceased owner (useful if the surviving spouse is younger and wants to delay RMDs)

Roth inherited IRAs: The 10-year rule still applies, but since Roth distributions are generally tax-free, there is no income tax impact. However, you must still empty the account within 10 years. There are no required annual distributions during the 10-year period for inherited Roth IRAs.

Tax planning: Spread withdrawals across years to manage your tax bracket. Taking the entire inherited IRA in one year could push you into the 32% or 37% bracket.