Starting January 1, 2025, the IRS penalty waivers that let many heirs skip annual withdrawals are gone, and the inherited IRA RMD rules for 2025 require most non-spouse beneficiaries to take a distribution every year during the 10-year window when the original owner died on or after their required beginning date. The account still has to be emptied by the end of the tenth year after death, and missing an annual amount now triggers a 25% excise tax on the shortfall.1Internal Revenue Service. Notice 2024-35 – Certain Required Minimum Distributions for 2024
Who Has to Take an Annual Distribution in 2025
Whether you owe an annual RMD depends on three things: when you inherited, your relationship to the original owner, and whether the owner had reached their required beginning date before dying. The required beginning date is generally April 1 of the year after the owner turned 73. For owners born in 1960 or later, the age is 75.2Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Inherited Before 2020
The SECURE Act’s 10-year rule does not reach back. If you inherited before January 1, 2020, you stay on the old stretch schedule, taking annual distributions over your own life expectancy using the IRS Single Life Expectancy table.3Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements
Eligible Designated Beneficiaries
A narrow group is exempt from the 10-year rule entirely and can still stretch distributions over life expectancy: surviving spouses, minor children of the original owner (only until they reach the age of majority, when the 10-year clock then starts), disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the owner. A surviving spouse can also roll the account into their own IRA and use standard RMD rules based on their own age.4Internal Revenue Service. Retirement Topics – Beneficiary
Owner Died Before Their Required Beginning Date
If the original owner died before reaching their required beginning date and you are a non-spouse designated beneficiary, no annual RMDs are required. You choose when to withdraw and in what amounts during the 10-year period, as long as the balance is zero by December 31 of the tenth year after death. An owner who died in March 2022 at age 65, for instance, had not yet reached their required beginning date, so the beneficiary owes nothing annually but must empty the account by December 31, 2032.
Owner Died On or After Their Required Beginning Date
This is the scenario the final regulations target. When the owner had already started their own RMDs before dying, you have to take an annual RMD in each year of the 10-year window and empty the account by the end of year ten.1Internal Revenue Service. Notice 2024-35 – Certain Required Minimum Distributions for 2024
The IRS waived enforcement of these annual distributions for 2021 through 2024 for beneficiaries whose owner died during 2020 through 2023.1Internal Revenue Service. Notice 2024-35 – Certain Required Minimum Distributions for 2024 That relief does not extend into 2025. If you inherited in 2020 or 2021 and skipped withdrawals under the waiver, you now owe an annual RMD for 2025 and each remaining year, plus full liquidation by the original ten-year deadline. The skipped years do not reduce the balance, so the required amounts from 2025 forward will be larger than they would have been with steady withdrawals. If the owner died in 2024 or later on or after their required beginning date, annual distributions begin the year after death with no waiver.
Inherited Roth IRAs
Roth owners are never required to take distributions during life, so they never reach a required beginning date. For beneficiaries, that means no annual RMDs during the 10-year window regardless of when the owner died. You only need to empty the account by the end of year ten, and qualified distributions come out tax-free.
How to Calculate the Annual Amount
When annual RMDs are required, use the IRS Single Life Expectancy table (Table I in Publication 590-B). Find the factor for your age in the year after the owner’s death, then subtract one from that factor for each subsequent year.3Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements
An example. You were 50 in the year after the owner’s death, and the table gives a factor of 36.2. Your first-year RMD equals the prior December 31 balance divided by 36.2. The next year the factor is 35.2, then 34.2, and so on. Each year, divide the December 31 balance from the year before by that year’s factor.
Your custodian can help identify the correct factor, but the responsibility for taking the right amount sits with you. If the account grew during the waiver years, catch-up RMDs from 2025 onward may be larger than expected.
Don’t Forget the Owner’s Final-Year RMD
If the original owner died during a year in which they owed an RMD but had not yet taken it, the beneficiary has to finish that distribution. This is the owner’s RMD for the year of death, separate from anything you owe under the 10-year rule.5Internal Revenue Service. Required Minimum Distributions for IRA Beneficiaries Say a parent died in September 2024 after reaching their required beginning date without taking the 2024 amount. You need to take that final 2024 distribution for them. Skipping it can trigger the excise tax on the shortfall.
What Missing a Distribution Costs Now
The excise tax for a missed RMD is 25% of the amount you should have withdrawn. Miss a $20,000 distribution and the penalty is $5,000. SECURE 2.0, enacted in December 2022, cut the rate from the older 50% figure for taxable years beginning after that date.6Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
The penalty drops to 10% if you correct the mistake within the correction window, which generally means taking the missed distribution and filing an amended or timely return reflecting the tax within two years.6Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans That is a real incentive to fix errors quickly.
The 2021 through 2024 waiver period required no Form 5329 filing for the annual amounts it covered.7Internal Revenue Service. Instructions for Form 5329 Starting in 2025, that blanket relief is gone. If you miss a distribution, report it on Form 5329 and either pay the 25% excise tax or request a waiver for reasonable cause.
Planning Across the Ten Years
Annual RMDs are a floor, not a ceiling. You can always take more, and how you spread withdrawals across the decade can save thousands in tax.
Procrastination is the biggest trap. Take only the minimum each year and leave most of the balance for year ten, and that final withdrawal can push you into a much higher bracket. A $500,000 inherited IRA drained mostly in year ten can produce a six-figure tax bill in a single year.
Spreading distributions more evenly keeps you in lower brackets. If your income swings from year to year, load larger withdrawals into the lower-income years: a year between jobs, a year with heavy deductible expenses, or a year before Social Security starts.
Watch the interaction with other income too. Inherited IRA distributions are ordinary income, so they can push you past thresholds that trigger Medicare premium surcharges or increase the taxable share of Social Security benefits. Running the numbers before year-end leaves time to adjust the withdrawal instead of finding out in April.