Updated October 2026

If you own an IRA, 401(k), or other retirement account, two federal laws, the SECURE Act and the SECURE 2.0 Act, along with IRS regulations finalized in 2024, have changed how your beneficiaries will inherit those accounts. If your estate plan or beneficiary designations were set up before these changes, they may no longer work the way you intended.

The End of the “Stretch” for Most Beneficiaries

Before 2020, most beneficiaries could “stretch” withdrawals from an inherited retirement account over their own life expectancy, spreading out the income tax over many years. The SECURE Act, effective in 2020, ended that for most beneficiaries. Now, most beneficiaries must withdraw the entire account by the end of the 10th year after the owner’s death.

Who Is Exempt From the 10-Year Rule

Certain “eligible designated beneficiaries” can still take distributions over their life expectancy:

  • A surviving spouse
  • The account owner’s minor child, but only until age 21, when the 10-year rule begins
  • Disabled or chronically ill individuals
  • Beneficiaries not more than 10 years younger than the account owner

What the Final IRS Regulations Clarified

The IRS’s final regulations, issued in July 2024, resolved a major point of confusion:

  • If the owner had already started required distributions before death, a beneficiary subject to the 10-year rule must generally take annual distributions in years one through nine, and empty the account by the end of year 10.
  • If the owner died before required distributions began, annual withdrawals generally aren’t required, but the account must still be emptied by the end of year 10.
  • These annual distributions are now enforced. After waiving penalties for 2021 through 2024, the IRS began enforcing them in 2025.

Other SECURE 2.0 Changes Worth Knowing

  • Later required distributions for owners: the age to begin required minimum distributions rose to 73, and rises to 75 beginning in 2033.
  • Smaller penalties: the penalty for a missed required distribution dropped to 25%, or 10% if corrected promptly.
  • More flexibility for special needs trusts: a charity can now be named as a remainder beneficiary of a trust for a disabled or chronically ill beneficiary without losing favorable treatment.

Why This Matters for Your Estate Plan

The shorter payout period can accelerate income taxes for your beneficiaries, possibly pushing them into higher tax brackets in the years they inherit. But tax isn’t the only concern. Many families also want to protect an inheritance from a beneficiary’s creditors, a divorcing spouse, or their own decisions.

If your trust is named as the beneficiary of a retirement account, its terms matter a great deal. Some older trusts use a “conduit” structure that passes every distribution straight to the beneficiary; under the 10-year rule, that can mean the full account reaches the beneficiary within a decade, with little protection. An “accumulation” trust can hold distributions in trust instead, though it involves its own tax trade-offs. The right approach depends on your goals and your beneficiaries.

What You Should Do Now

  • Review the beneficiary designations on every retirement account and life insurance policy
  • If a trust is named as a beneficiary, have its retirement provisions reviewed in light of the current rules
  • Consider whether a beneficiary has special needs, in which case a properly structured trust may preserve the longer payout period

To learn more, see our guide to Reviewing and Updating Your Estate Plan and our page on Special Needs Planning, or schedule a free consultation.

This article provides general information about federal law as of October 2026 and is not legal or tax advice for your specific situation. Retirement account rules are complex and change over time, so please consult an attorney and your tax advisor about your circumstances.