The problem SECURE created
Before 2020, most non-spouse beneficiaries could stretch an IRA beyond 10 years by taking required minimum distributions (RMDs) over their life expectancy. A 40-year-old child might have had three decades to peel money out slowly. After SECURE, most non-spouse heirs became Non-Eligible Designated Beneficiaries (NEDBs). Their rule is simple and unforgiving: the account must be fully distributed by December 31 of the 10th year after death. It does not care how young the heir is. It does not care about their tax bracket. Ten years. Full stop.
Planners tried to rebuild the stretch with charitable remainder trusts, life insurance, and Roth conversions. All good tools, but none perfectly re-create the long, lazy payout we lost. Roth IRAs, for example, still have to be emptied in ten years when a non-spouse inherits them. We just removed the income tax on the back end.
The group Congress forgot
One group did not change: non-designated beneficiaries (NDBs) — beneficiaries who are not people. Think: the estate, a non-see-through trust, sometimes a charity, or other entities which don’t have a life expectancy. Those have long followed a separate post-death timetable:
- If the IRA owner dies before their Required Beginning Date (RBD), the NDB must empty the account within 5 years.
- If the IRA owner dies on or after their RBD, the NDB can use the decedent’s remaining single-life expectancy, reduced by one each year. That’s the key line.
Why does this matter? Because for someone who just passed their RBD, their remaining life expectancy can easily be longer than 10 years — sometimes 11, 12, even 13 years depending on age. So if the owner dies just after RBD and the beneficiary is intentionally made a non-designated beneficiary, the payout can actually be longer than the 10-year rule the kids would have gotten as regular designated beneficiaries.
This is the heart of the INDB concept:
Wait until the owner is past RBD, then name a beneficiary in such a way the account is treated as inherited by a non-designated beneficiary, so the payout follows the owner’s remaining life expectancy instead of the heir’s 10-year countdown.
It is deliberately choosing the “worse” kind of beneficiary to get a “better” payout and stretch an IRA beyond 10 years.
Timing is everything
There is a catch. As someone ages, their remaining life expectancy gets shorter. At some point, the owner’s remaining life expectancy will be less than 10 years, and in that case a normal individual beneficiary would have been better off. So the INDB strategy is not “set it and forget it.” It is a windowed strategy — useful for clients in the early, post-RBD years, less useful later.
A good way to think about it:
- Before RBD → don’t do this. Death before RBD gives non-designated beneficiaries the 5-year rule, which is worse.
- Just after RBD → prime opportunity. Owner’s remaining life expectancy can exceed 10 years.
- Much later in life → switch back to people (kids, see-through trust, etc.) because the owner’s remaining life expectancy will be shorter than 10 years.
So, yes, this is one of those beneficiary-form strategies we update just like we update a will — as the client ages, or as family circumstances change.
“But won’t the RMDs be bigger?”
Yes. This is the tradeoff. Even though we can sometimes make the period longer than 10 years, the annual RMDs for an INDB during the first nine years are typically larger than what a straight 10-year individual beneficiary would have faced. In plain terms, we stretched the calendar but front-loaded the income. That means we need to pay attention to the heir’s bracket, the client’s charitable goals, and whether the IRA is traditional or Roth.
Interestingly, the article notes this can even apply to some Roth situations, especially inside employer plans where the Roth money might otherwise have awkward distribution rules. If the dollars are ultimately going to tax-sensitive heirs, adding a year or three to the payout can still beat the alternative even if distributions are chunky.
How you actually make someone an INDB
There are several ways to trigger non-designated treatment: naming the estate; naming a trust that doesn’t qualify as a see-through; or using certain other non-person beneficiaries. The mechanics will depend on the custodian and the trust language. This is where collaboration among the advisor, the drafting attorney, and the tax preparer becomes crucial. We want the beneficiary designation, the trust, and the intended distribution schedule to all tell the same story.
And, importantly, because we are using a less favorable beneficiary classification on purpose, we document the rationale. A future trustee or child should be able to read the file and see, “Mom was 75, past RBD, her life expectancy table gave us 12 years, so the advisor recommended this format to slow the taxable bleed. We didn’t blunder into this; we chose it.”
When I would consider it
This strategy is not for everyone. I would look at it for families where:
- The IRA owner is already past RBD.
- The beneficiaries are high-earning adult children who would hate a 10-year forced-distribution window.
- The balance is large enough a 10-year period would feel punitive.
- The client is comfortable naming a trust or estate as beneficiary and can keep documents current.
- We are already doing Roth conversions or other pre-death tax maneuvers and want to give heirs more runway.
It is less attractive for very elderly clients, small accounts, or families where the kids actually want money quickly.
Why this matters for real families
A lot of SECURE-Act planning feels like we are just mopping up a mess Congress made. This, however, is one of the few moves where we can say to a client, “Because you lived past your RMD start, we can buy your kids extra time.” That is a much more empowering conversation. It is closer to the way estate planning felt before SECURE, when we could stretch an IRA Beyond 10 Years.
Final thought and next step
Being able to stretch an IRA beyond 10 years has a lot of potential to create significant tax efficiencies, but it will not be right for every family, and in some situations, it will be flatly inferior to just leaving the IRA to people. Which is why you do not copy your neighbor’s beneficiary form.
If you are staring at a sizable IRA, are already past RMD age, and want to control how quickly the IRS gets to taste it, we should talk. We can map out the 10-year default, compare it with an intentional non-designated approach, layer in your trust language, and decide which version tells the story you want your heirs to read.
Bryan Wisda is a CERTIFIED FINANCIAL PLANNER™️ and is the President of Almega Wealth Management. He has more than 30 years of experience in the financial services industry and is most known for working with generational wealth builders to create stronger families. To schedule an exploratory call with Bryan, click here!