This one is about the money that gets passed down — the IRA a parent leaves a child, the 401(k) rolled into an inherited account. There’s a rule change here that most families haven’t absorbed, and it can quietly cost an heir tens of thousands in avoidable tax. Legacy is a MacwithIntent pillar, so we’re going to be precise.

For a long time, if you inherited a retirement account from someone who wasn’t your spouse, you could “stretch” it. You took small required withdrawals based on your own life expectancy, spreading the account — and the taxes on it — across decades. A 30-year-old inheriting from a parent could let most of that money keep growing tax-deferred for 40+ years, pulling out a little at a time in low-tax slices. That was the stretch IRA, and it was one of the most powerful wealth-transfer tools in the code.

The SECURE Act of 2019 ended it for most heirs. If you’re a typical adult child (or most other non-spouse beneficiaries) inheriting a retirement account today, you’re under the 10-year rule: the entire account must be emptied by the end of the tenth year after the owner’s death. No more lifetime stretch.

And it got sharper. Under final IRS regulations, if the person you inherited from had already started their required minimum distributions, you must also take annual withdrawals in years one through nine — and empty the rest by year ten. After a period of penalty relief, the IRS began enforcing that annual requirement in 2025. For many heirs, a required withdrawal was due by the end of 2025.

Every dollar coming out of a traditional inherited IRA is taxable income to you. Cram a large account into a 10-year window, and you’re stacking big withdrawals on top of your peak-earning salary — potentially pushing yourself into higher brackets and inflating the tax on the whole thing. The heir who waits until year ten and pulls it all at once can hand a shocking share to the IRS in a single year. The stretch used to smooth that over a lifetime. Now the clock is loud and short.

Two moves, both free. If you’ve inherited a retirement account since 2020, confirm which rules apply to you — spouse and certain other “eligible” beneficiaries get different treatment — and whether you owe an annual withdrawal now, so you don’t miss one. The smart planning question is: “How do I spread these withdrawals across the 10 years to keep myself out of higher brackets?” rather than facing a wall in year ten. If you plan to leave a retirement account, understand that your heirs will face this compressed timeline — and that changes how you might think about Roth conversions, beneficiary choices, and simply telling your family the rule before they learn it from a surprise tax bill.

Legacy isn’t only about how much you leave. It’s about how much actually reaches the people you love versus how much evaporates in taxes they never saw coming. The stretch is gone, but the planning window isn’t — and the families who come through this well will be the ones who understood the new rules early instead of discovering them in probate. That’s intentionality applied to the one transaction you don’t get to redo.

That’s enough for one week.

— Mario

P.S. If your parents have retirement accounts — or you do, and you have kids — this is a conversation worth having out loud. Forward it. Free to subscribe at macwithintent.com/subscribe.

Educational only — not personalized tax, legal, or financial advice. Inherited-account rules depend on your relationship to the owner, their age at death, and account type, and can change; confirm your specific situation with a qualified tax or estate professional. Mario Cabral is a CERTIFIED FINANCIAL PLANNER™ professional.