If you have money in an IRA—or expect to inherit one—the recent 2024 IRS rulings may significantly impact how you plan for retirement and how your heirs receive what you leave behind. While these may seem like dry technical updates, they’re actually crucial for avoiding costly mistakes, especially in an era of growing tax uncertainty.
At Cardinal Advisors, we’ve walked thousands of families through IRA strategies, and we’ve never seen as many rule changes and clarifications in one year as we did in 2024. These new rulings help fill in the gaps from the original SECURE Act (2019) and SECURE Act 2.0 (2022), giving us clearer guidance on how inherited IRAs are treated, especially when it comes to Required Minimum Distributions (RMDs) and the 10-Year Rule.
Let’s walk through the top five rulings and what they mean for you, your retirement income, and your heirs.
🔍 A Quick Recap: What Is the SECURE Act?
The original SECURE Act made sweeping changes to retirement law, particularly when it came to inherited IRAs. Before 2020, non-spouse beneficiaries could “stretch” inherited IRA distributions over their lifetimes, minimizing taxes along the way. The SECURE Act ended that for most people, replacing it with a 10-Year Rule—meaning the entire account must be emptied within 10 years of the original account owner’s death.
That change alone dramatically increased the potential tax liability on inherited accounts. But the language in the SECURE Act was murky. So was SECURE 2.0. The IRS has now clarified five major areas in 2024—and these updates carry real implications for anyone planning retirement or leaving assets to heirs.
🧾 1. The 10-Year Rule and the “At Least As Rapidly” Rule
One of the most misunderstood parts of the SECURE Act is how Required Minimum Distributions (RMDs) apply to inherited IRAs under the 10-Year Rule.
The IRS Clarified:
If the original account owner had already started RMDs (i.e., was age 73 or older), then the non-spouse beneficiary must:
- Continue taking annual RMDs based on their own life expectancy for years 1–9
- Fully empty the account by the end of year 10
This is a huge planning point. Many people assumed they could delay withdrawals and let the account grow tax-deferred—only to face a massive tax bill in the 10th year. That’s not only risky, it’s now incorrect.
Planning Tip:
Rather than take the minimum each year and get slammed with a big distribution at the end, you can often benefit from taking evenly spread withdrawals over the 10 years. This reduces your taxable income spikes and helps avoid IRMAA penalties or pushing into higher tax brackets.
2. Roth IRAs Still Subject to the 10-Year Rule—But Not RMDs
Roth IRAs remain one of the best tools for tax-free retirement and estate planning. The 2024 IRS rulings confirm:
- Inherited Roth IRAs are still subject to the 10-Year Rule
- However, no annual RMDs are required during years 1–9, because the original Roth owner never had to take them
Strategy Insight:
If your heirs don’t need the money immediately, they can let the Roth continue to grow for 10 full years—tax-free—and then withdraw it all at the end.
This is one reason why Roth conversions during your lifetime can be a powerful tool. You take control of the taxes, and your heirs receive a much cleaner, simpler asset.
3. Eligible Designated Beneficiaries: Expanded Definitions
There are five categories of Eligible Designated Beneficiaries (EDBs) who are exempt from the 10-Year Rule and can still stretch withdrawals over their lifetime:
- Surviving spouses
- Minor children (of the original account holder)
- Disabled individuals
- Chronically ill individuals
- Individuals not more than 10 years younger than the deceased
2024 Update:
The IRS broadened the definition of “disabled” to allow more people to qualify. This is especially relevant for:
- Special needs planning
- Parents who want to leave IRAs to children receiving government assistance (SSI, Medicaid)
Why This Matters:
Lifetime distributions reduce the yearly tax burden. And for those receiving public benefits, keeping taxable income low is critical to avoid disqualifying from essential services.
4. Aggregated RMDs Must Be Taken Before Roth Conversions
Many IRA owners have multiple accounts. It’s long been allowed to calculate your total RMD across all accounts and take it from just one. But here’s the catch:
New Rule:
If you plan to do a Roth conversion, you must take your full RMD (from all accounts) first—before converting any additional funds.
Why It’s Important:
Missing this step can cause serious tax issues or an invalid conversion. This ruling reinforces the need to plan your withdrawals and conversions together, not separately.
5. New Relief for Missed RMDs: 3-Year Statute of Limitations
Many families discover too late that an aging parent never took required RMDs—sometimes for years. This often happens due to cognitive decline or confusion about changing rules.
The Good News:
As of 2024, there’s now a 3-year statute of limitations on missed RMDs (unless fraud is involved). This dramatically reduces the penalty risk for families trying to clean up old tax issues.
In Practice:
We’ve helped clients correct missed distributions, file appeals, and avoid unnecessary penalties. If you discover a problem, don’t wait—this ruling gives you a window of opportunity to fix things with the IRS.
Big Picture: Planning Around the Rules
While these rules may sound restrictive, they also open the door to smart strategies:
Even Distribution Planning
Structure withdrawals to avoid spikes in income that could trigger higher tax rates or Medicare penalties.
Roth Conversion Timing
Convert when you’re in a lower tax bracket or in the early retirement “gap years.”
Use Life Insurance Strategically
Use RMDs to fund life insurance, creating a tax-free legacy instead of a tax-deferred burden.
Annuities for Simplicity
Some clients choose to place inherited IRA assets in a 10-year annuity that meets IRS withdrawal rules and guarantees income.
Combine With Long-Term Care Planning
There are now life/LTC policies where premiums can be paid directly from IRA funds—turning a tax headache into a long-term asset for your family.
Real-Life Examples
One of our clients inherited an IRA from her father in 2021 but is still working and in a high tax bracket. She plans to retire in 2026 and wants to delay withdrawals until then. Thanks to the 2024 clarification, she now knows she’ll need to begin RMDs in 2025—but with proper planning, we can stretch the remainder of withdrawals over her lower-income retirement years.
In another case, a man inherited a $7.5 million IRA from his sister. Because he was within 10 years of her age, he qualified as an Eligible Designated Beneficiary and was able to stretch distributions over 19 years using a deferred annuity that sends him monthly checks until age 86. His taxes are controlled, and his future is secure.
Final Thoughts
The 2024 IRS rulings on IRAs don’t just clarify past confusion—they provide a roadmap for smarter retirement and estate planning. Whether you’re managing your own retirement account or planning for what your heirs will inherit, these rules matter.
At Cardinal Advisors, we work with individuals and families across all 50 states to design tax-efficient plans tailored to your goals.
