What is the inherited IRA 10-year rule, in plain terms?

It requires most non-spouse beneficiaries of IRAs inherited in 2020 or later to empty the account by December 31 of the 10th year after the original owner’s death. If the decedent died after their required beginning date, annual RMDs often apply during years one through nine. Roth heirs typically have no annual RMDs, but the account still must be fully distributed by year 10.

How does the RMD penalty 25% work for beneficiaries?

If a required minimum distribution is missed, the IRS imposes a 25% excise tax on the shortfall. If you correct the error and file properly within the allowed window, the penalty can drop to 10%. From 2025 onward, these penalties apply after the prior grace period. Keep precise records, file any needed extensions, and attach the excise tax form to your US return.

How do Roth IRA inheritance rules differ from traditional IRAs?

For inherited Roth IRAs, beneficiaries usually do not need annual RMDs, but must still drain the account by year 10. Distributions are generally tax-free if the 5-year aging rule is met. Traditional inherited IRAs can require annual RMDs if the decedent died after their required beginning date, and withdrawals are taxable as ordinary income to the beneficiary.

What should Singapore-based heirs do first after inheriting a US IRA?

Confirm your beneficiary status, the decedent’s required beginning date, and whether the account is traditional or Roth. Ask the custodian about US withholding for nonresident beneficiaries. Build a 10-year withdrawal schedule to manage taxes and SGD needs. File US returns as needed to reconcile withholding and claim any penalty reductions. Seek cross-border tax advice before your first distribution.

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Inherited IRA Rules on February 19: 10-Year Clock, 25% Penalty Now in Force

ByHuzaifa Zahoor February 19, 2026February 19, 2026

The inherited IRA 10-year rule is now fully active, ending the grace period for many heirs of accounts inherited in 2020 or later. Most non-spouse beneficiaries must empty inherited IRAs within 10 years, and if the original owner died after their required beginning date, annual RMDs also apply. Missed withdrawals can trigger a 25% excise tax. For Singapore-based families with US ties, we outline who is affected, how deadlines work in 2025–2026, and practical steps to avoid penalties and higher taxes.