The SECURE Act (2019) eliminated the lifetime 'stretch' for most inherited retirement accounts, replacing it with a 10-year distribution rule. The IRS finalized regulations in July 2024, and full enforcement of annual required minimum distributions (RMDs) within the 10-year window began in 2025. Because retirement accounts are often a client's largest asset and carry embedded income tax, coordinating beneficiary designations with the trust plan is essential.
Verify current guidance
This area has evolved through multiple notices and the 2024 final/proposed regulations. Confirm the current RMD and applicability rules for the client's facts before advising.
For most non-spouse beneficiaries who inherit after 2019, the entire account must be distributed by the end of the tenth year following the owner's death. The 2024 final regulations resolved a key ambiguity:
- If the owner died AFTER their required beginning date (RBD), the beneficiary must take annual RMDs in years 1-9 AND empty the account by year 10 ('at least as rapidly' rule).
- If the owner died BEFORE the RBD, no annual RMDs are required in years 1-9 — the beneficiary may take distributions in any pattern so long as the account is empty by year 10.
- The IRS waived penalties for missed 'specified RMDs' for 2021-2024; annual RMDs are enforced beginning in 2025.
EDBs are exempt from the 10-year rule and may still stretch distributions over life expectancy (or, for a minor child, until majority, then a 10-year window). The five EDB categories are:
- The surviving spouse (with additional spousal rollover/elections and, under SECURE 2.0, an option to be treated as the deceased participant).
- A minor child of the account owner (only until the age of majority — then the 10-year rule begins; not grandchildren).
- A disabled individual (as defined in IRC 72(m)(7)).
- A chronically ill individual.
- A beneficiary not more than 10 years younger than the owner.
Key takeaways
- Most non-spouse beneficiaries must empty inherited accounts within 10 years; annual RMDs in years 1-9 are required (and enforced from 2025) if the owner died after the RBD.
- EDBs (spouse, minor child of owner, disabled, chronically ill, or <10 years younger) still get a stretch.
- Conduit trusts push RMDs to the beneficiary; accumulation trusts retain them but face compressed brackets (37% at ~$16,000 in 2026).
- An AMBT preserves both special-needs protection and life-expectancy payout.
Authorities
- SECURE Act (2019); SECURE 2.0 Act (2022); IRC 401(a)(9)
- T.D. 10001 — final regulations (July 2024) and 2024 proposed regulations
- IRS Notices 2022-53, 2023-54, 2024-35 (RMD penalty relief 2021-2024)