What changed
Before the SECURE Act, a non-spouse beneficiary could take distributions from an inherited IRA across their own life expectancy — the so-called stretch. A 45-year-old inheriting from a parent could spread the tax over four decades. For deaths from 2020 onward, most non-spouse beneficiaries instead have ten years to empty the account.
The account is not taxed more heavily. It is taxed faster, and in fewer years. Whether that matters depends almost entirely on who inherits it and what else they earn.
Who is exempt
A category of eligible designated beneficiaries can still use life-expectancy distributions:
- A surviving spouse, who additionally has options no other beneficiary has, including treating the account as their own.
- A minor child of the account owner — but only until they reach majority, at which point the ten-year clock starts.
- A beneficiary who is disabled or chronically ill, as defined in the statute.
- A beneficiary less than ten years younger than the owner, which often means a sibling.
Note what is missing from that list: adult children. For most families, the people expected to inherit the largest pre-tax balances are precisely the ones with ten years and a full-time salary.
Why the timing lands badly
The ten years following a parent’s death frequently coincide with the beneficiary’s peak earning decade — their forties and fifties. Distributions stack on top of that salary at their marginal rate. An account built up at one rate can be drawn down at a materially higher one.
| Factor | Under the old stretch | Under the ten-year rule |
|---|---|---|
| Years to withdraw | Beneficiary’s life expectancy | Ten |
| Annual amount | Small relative to income | Large relative to income |
| Rate applied | Often a lower bracket | Beneficiary’s peak bracket |
| Planning lever | Little needed | Timing within the ten years |
What the owner can still do
- Convert during your own low-tax years. Tax paid at your rate in a low-income year can be materially cheaper than tax paid at a beneficiary’s rate on top of a salary. A Roth inherited under the ten-year rule still has to be emptied, but the withdrawals are tax-free.
- Match the asset to the beneficiary. Pre-tax balances are the most tax-inefficient thing to leave to a high earner and among the most efficient to leave to charity, which pays no tax on them.
- Check the beneficiary designations. They override your will, and they are frequently decades out of date — a former spouse, a deceased parent, or nobody at all.
- Consider spreading across generations or years. Ten years is a window, not a schedule; there is no annual minimum, so the beneficiary chooses the timing within it.
The point is whose rate applies
Most estate planning conversations are about who receives what. This one is about at whose tax rate they receive it. Those are different questions, and the second is the one the ten-year rule made expensive to ignore.
This article is general information, not individualized investment, tax, or legal advice, and it does not account for your circumstances. Tax rules referenced are those in effect at the date shown and change over time. Consult a qualified professional before acting.