Is the Stretch IRA Dead for Everyone?

Good to Know

The answer posed by the blog title is no. That’s good news. The bad news is that only a short list of beneficiaries is eligible for stretch IRA treatment at the death of the original IRA owner. Only an eligible designated beneficiary can stretch distributions from Traditional IRAs where the original owner died on or after January 1, 2020. The stretch is possible because only eligible designated beneficiaries are exempt from the 10-year distribution rule. Before going farther, we need to define exactly what “stretch IRA” and the “10-year rule” means.

Key Terms

A Stretch IRA is a wealth-transfer strategy that allows an eligible designated beneficiary to stretch minimum required distributions over the beneficiary’s lifetime in some cases.

The 10-year rule requires that if an original IRA owner dies on or after January 1, 2020, a designated beneficiary (living person named by the decedent as a beneficiary) that is not an eligible designated beneficiary must generally take 100% of the decedent’s IRA balance by the end of the tenth year following the original owner’s death.

Eligible Designated Beneficiary

Eligible designated beneficiaries are exempt from the 10-year rule, may generally take distributions over their lifetime, and include the following:

  • The surviving spouse,
  • A disabled or chronically ill individual,
  • A minor child (until the child reaches the age of legal majority), and
  • An individual 10 years or less younger than the decedent (example, siblings near the decedent’s age).

There is a notable exception to the 10-year rule.

Grandfathered Exception

Stretch IRAs that commenced before January 1, 2021, are generally grandfathered under the previous rules. Under the previous rules, required minimum distributions for non-spousal individual IRA beneficiaries were generally based upon the beneficiary’s lifetime.



The information presented herein is provided purely for educational purposes and to raise awareness of these issues; it is not meant to provide and should not be used to provide Social Security, retirement, tax, legal, insurance, investment, compliance or financial advice. There are variations, alternatives, and exceptions to this material that could not be covered within the scope of this blog.