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Break Analytics — Inherited IRA Planning Software

Inherited IRA Rules Changed With SECURE 2.0.
The Wrong Move Costs Your Client a 25% Excise Tax.

Three beneficiary categories, the 10-year rule, whether annual distributions apply — the IRS final RMD regulations made an already complex set of rules more complex, not less. Break Analytics takes the guesswork out of Inherited IRA calculations so your clients don’t miss a required distribution and trigger a 25% excise tax.

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  • Beneficiary-Specific Rules
  • 10-Year Rule Modeling
  • Distribution Smoothing™
  • Pre- & SECURE Act Rules

What Changed — and Why It Matters to Your Clients

The SECURE Act and SECURE 2.0 eliminated the life expectancy option — commonly known as the stretch IRA strategy — for most non-spouse beneficiaries, replacing it with a 10-year rule that requires distributions by the end of the tenth calendar year following the year of the original owner’s death. Designated Beneficiaries (DB) who inherited an IRA from an owner who died on or after their Required Beginning Date (RBD) will take Required Minimum Distributions (RMDs) in years 1–9 and empty the account in year 10. DBs who inherited an IRA from an owner who died before their RBD have no mandatory distributions in years 1–9 but must empty the account by the end of year 10. A missed RMD triggers a 25% excise tax on the amount that should have been distributed.

The challenge isn’t just knowing the rules — it’s applying the right rule to every Inherited IRA client. Eligible Designated Beneficiary vs. Designated Beneficiary vs. Non-Designated Beneficiary. Died before 2020 or died after 2019. Break Analytics takes the guesswork out of Inherited IRA calculations because the IRC rules are built in and the math is completed for you — no spreadsheets, manual calculations, or risk of applying the wrong rule.

Beneficiary Classifications Under Pre-SECURE Act and SECURE Act Rules

The SECURE Act introduced the Eligible Designated Beneficiary classification and eliminated the life expectancy option for Designated Beneficiaries, replacing it with the 10-year rule. Non-spouse and qualified “look-through” trust beneficiaries who inherited before 2020 can use the life expectancy option.

Eligible Designated Beneficiary (EDB)
Who Qualifies
  • Surviving Spouse
  • Minor Child of the IRA Owner Who Has Not Surpassed Age 21
  • Chronically Ill / Disabled
  • Not More Than 10 Years Younger, the Same Age, or Older Than the Owner

EDBs generally use the life expectancy option. Minor children of the IRA owner begin as EDBs and transition to a DB with RMDs after surpassing age 21. Surviving spouses have the most flexible options — including treating the Inherited IRA as their own.

Designated Beneficiary (DB)
Who Qualifies
  • Child of the IRA Owner Who Has Surpassed Age 21
  • Individuals More Than 10 Years Younger Than the IRA Owner (based on date of birth)
  • Individuals Not Chronically Ill/Disabled
  • Primary Beneficiary of a Qualified Trust (QT) Who Is Not the Spouse or Chronically Ill/Disabled

Subject to the 10-year rule. RMDs are required in years 1–9 if the owner died on or after their RBD. No mandatory distributions in years 1–9 if the owner died before their RBD — but the account must be emptied by the end of year 10.

Non-Designated Beneficiary (NDB)
Who Qualifies
  • Estate
  • Charity
  • Non-Qualified Trust

5-year rule if the owner died before their RBD. If the owner died on or after their RBD, RMDs are based on the owner’s remaining life expectancy in the year of death.

Free Advisor Resource
The Inherited IRA Desk Reference

A two-page reference covering Inherited IRA distribution options under pre-SECURE Act and SECURE Act rules — the three beneficiary categories, RMD Ages, and the distribution option matrix for each beneficiary type. Built by Cathleen Davis-Whitmore, The IRA Oracle.

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Beneficiary-Specific Distribution Rules

Select your client’s beneficiary type and Break Analytics applies the correct IRC distribution rules — no spreadsheets, manual calculations, or risk of applying the wrong rule.

10-Year Rule Modeling

Models the 10-year distribution time frame with year-by-year projections.

Distribution Smoothing™

Break Analytics’ proprietary strategy that spreads distributions across the 10-year time frame — avoiding a large taxable distribution in year 10 that could push the beneficiary into a higher tax bracket.

Inherited Roth IRA Rules Built In

DBs have no RMDs during the 10-year time frame. EDBs take RMDs over their life expectancy term-certain time frame. Qualified distributions are tax-free under current law.

Client-Ready Illustrations

Each illustration explains the applicable Inherited IRA rules in plain language, calculates any necessary RMDs, and shows year-by-year distributions and account balance — ready to present to your client and stand up to compliance review.

IRS Final RMD Regulations Built In

The regulations confirmed that DBs subject to the 10-year rule must take RMDs when the owner died on or after their RBD — and the IRS waiver period has ended. Break Analytics reflects the current rules so your illustrations are always up to date.

What Advisors Do With Break Analytics

  • Select the beneficiary type and Break Analytics applies the correct IRC distribution rules — no manual lookups, no risk of applying the wrong rule.
  • Show clients the year-by-year distribution amounts and the potential tax impact of different illustrated strategies.
  • Use Distribution Smoothing™ to reduce tax bracket exposure across the remaining distribution time frame.
  • Model spouse and non-spouse Inherited IRA scenarios — including the surviving spouse’s complex distribution options.
  • Generate client-ready illustrations that explain the applicable Inherited IRA rules in plain language, calculate any necessary RMDs, and show year-by-year distributions and account balance — ready to present to your client and stand up to compliance review.

Inherited IRA Questions Advisors Ask Most

Does the 10-year rule include RMDs for Inherited IRAs?
If the owner died before their RBD, the 10-year rule applies without RMDs — the balance must be distributed by the end of the tenth calendar year following the year of the owner’s death. If the owner died on or after their RBD, RMDs are required in years 1–9 and the account must be emptied by the end of year 10. The IRS final RMD regulations clarified this distinction. See how Break Analytics handles this for your client →
What is the 10-year rule for Inherited IRAs after SECURE?
The SECURE Act eliminated the life expectancy option — commonly known as the stretch IRA strategy — for non-spouse Designated Beneficiaries who inherited from someone who died after 2019. Under the 10-year rule, the entire Inherited IRA balance must be distributed by December 31 of the tenth calendar year following the year of the original owner’s death. Failure to empty the account by the end of year 10 triggers a 25% excise tax on the remaining balance. See the 10-year rule modeled for your client →
What is the excise tax for missing an Inherited IRA distribution?
Missing an RMD from an Inherited IRA triggers a 25% excise tax. SECURE 2.0 reduced this from 50%, and it can be reduced further to 10% if corrected within the two-year correction window. The IRS waived the excise tax during the regulatory transition period through 2024 — the waiver has ended and the 25% excise tax now applies. Make sure your client doesn’t face this — see it live →
Can a non-spouse beneficiary roll their Inherited IRA into their own IRA?
No. Non-spouse beneficiaries cannot roll Inherited IRA assets into their own IRA. The Inherited IRA must remain titled as an Inherited IRA. Only surviving spouses have the option to roll Inherited IRA assets into their own IRA and treat it as their own.
What happens to an Inherited IRA when the beneficiary is a minor child?
A minor child of the IRA owner takes RMDs up until age 21. The year after they turn 21, they will have 10 years — until age 31 — to empty the Inherited IRA. RMDs continue during the 10-year time frame. See the EDB to DB transition modeled for your client →
What are a surviving spouse’s options when inheriting a deceased spouse’s IRA?
A surviving spouse has more options than any other beneficiary type — including treating the Inherited IRA as their own, life expectancy distributions, the 10-year rule, lump sum, or disclaim. The right choice depends on the spouse’s age, income needs, and estate planning goals. Break Analytics models the applicable options so you can identify the right strategy for your client. See your client’s spouse options modeled side by side →

Have a client scenario in mind? The fastest way to see if Break Analytics is right for you is a live walkthrough.

See How Break Analytics Handles Your Client’s Scenario

Bring a client scenario. We’ll model the distribution options and year-by-year projections live so you can see exactly how it works.

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