SECURE Act Forces Inherited IRA Holders to Empty Accounts Within 10 Years

The SECURE Act, enacted in 2020, ends the "stretch IRA" by requiring most non‑spouse beneficiaries to fully withdraw inherited traditional IRA balances within ten years of the original owner’s death. Under the prior rule, beneficiaries could spread distributions over their life expectancy, allowing tax‑deferred growth.

The ten‑year rule includes several exceptions: beneficiaries of owners who died before January 1 2020, surviving spouses, minor children (the period begins after the child reaches majority), disabled or chronically ill individuals, and those no more than ten years younger than the decedent. Errors such as taking the entire balance in a single year can push the beneficiary into a high marginal tax bracket, while taking no distributions misses required minimum distributions and reduces the account’s growth potential.

Fidelity estimates the average inherited IRA at roughly $257,000, touching about 559,000 high‑net‑worth accounts. Advisors suggest spreading withdrawals evenly over the ten‑year window, converting to a Roth IRA to keep future distributions tax‑free, or filing a qualified disclaimer to pass the assets to other heirs. Low personal‑savings rates and high credit‑costs are prompting some retirees to consider early withdrawals despite the tax consequences.