Inherited IRA Rules 2026: What Changed and What to Do Now

The Penalty Waiver Is Over

The most important inherited IRA change for 2026 is what's no longer in effect. From 2021 through 2024, the IRS waived the excise tax penalty for beneficiaries who missed annual RMDs within the 10-year depletion window. That grace period ended on December 31, 2024.

Starting with the 2025 tax year — and continuing into 2026 — the 25% excise tax on missed RMDs is fully enforced. If you inherited an IRA from someone who died after their Required Beginning Date (age 73 or 75 depending on birth year) and on or after January 1, 2020, you are required to take annual distributions in years 1 through 9, with the full balance due in year 10.

If you inherited the account in 2020 or 2021 and haven't been taking annual distributions, confirm the RMD amounts required for 2025 and 2026 and begin taking required distributions now. The IRS relief applied to 2021–2024; the SECURE 2.0 Act offers a reduced 10% penalty if you correct a shortfall within two years.

The Current Rules in One Framework

10-year rule for designated beneficiaries (most adult children): Inherited accounts from owners who died on or after January 1, 2020 must be fully depleted by December 31 of the 10th year following death. Annual RMDs during years 1-9 are required only if the original owner died on or after their RBD.

Stretch rule for eligible designated beneficiaries: Surviving spouses, disabled/chronically ill individuals, minor children (until age 21), and people not more than 10 years younger than the deceased can still stretch distributions over their own life expectancy.

5-year rule for non-designated beneficiaries: Estates, non-qualifying trusts, and charities must deplete the account within 5 years if the owner died before their RBD, or over the deceased's remaining life expectancy if death occurred after the RBD.

RBD Ages to Track

The Required Beginning Date shifted under SECURE 2.0. For 2026, the relevant ages are:

• Born 1951–1959: RBD age is 73
• Born 1960 or later: RBD age is 75

If the deceased owner was younger than these thresholds at death, they died "before their RBD," and annual RMDs within the 10-year window are not required. If they were at or past these ages, annual distributions are mandatory.

What Beneficiaries Should Do This Year

First, confirm whether you owe an annual RMD for 2026. Pull your inherited IRA balance as of December 31, 2025, and divide it by your life expectancy factor from the IRS Single Life Table (reduced by 1.0 for each year since the first distribution year).

Second, check whether you missed any distributions in 2025 — the first year the penalty applied without waiver. If you did, file Form 5329 and request the reduced 10% penalty under the correction window.

Third, plan your remaining distributions across the 10-year window to minimize the total tax hit. Front-loading in lower-income years or coordinating with Roth conversions in your own accounts can shift thousands in tax savings.

The retirement account claims guide includes the current-year distribution worksheets and Single Life Table factors, along with a year-by-year tax planning template calibrated for the post-waiver rules.