The U.S. Internal Revenue Service has fully reinstated enforcement of required minimum distribution (RMD) rules for inherited traditional individual retirement accounts (IRAs), ending a temporary penalty waiver that lasted from 2021 through 2024. Starting with the 2025 tax year, beneficiaries who fail to take required withdrawals may face penalties of up to 25 percent unless corrective action is taken.

The rules stem from the SECURE Act of 2019, which largely eliminated the so-called “stretch IRA” strategy for most non-spouse beneficiaries. Under the new framework, many heirs—classified as non-eligible designated beneficiaries—must empty inherited IRA accounts within 10 years of the original owner’s death, replacing previous lifetime withdrawal options.

Whether annual withdrawals are required depends on the timing of the original account holder’s death relative to their required beginning date for RMDs. If the original owner had already started RMDs, beneficiaries must take annual distributions throughout the 10-year period. If not, withdrawals can be deferred, but the account must still be fully depleted by the end of year 10.

The amount of each annual withdrawal is not fixed and is calculated using the account’s prior year-end balance and an IRS life expectancy factor from Publication 590-B. Beneficiaries must recalculate this figure each year based on updated age-based tables, often with assistance from IRA custodians or tax professionals to ensure compliance.

The IRS has also outlined penalties for missed distributions, including a 25 percent excise tax, which can be reduced to 10 percent if corrected promptly and properly reported using Form 5329. Taxpayers who missed a 2025 RMD are advised to withdraw the required amount immediately and request penalty relief if eligible, as enforcement of the rule is now fully active.