Inherited Roth IRA Rules 2026: What Beneficiaries Must Know
Quick answer
If you inherit a Roth IRA as a non-spouse beneficiary, the SECURE Act's 10-year rule requires you to drain it by December 31 of the tenth year after the year of death. You pay no tax on withdrawals if the original account-holder had any Roth IRA open for five or more years; if not, earnings are taxed as ordinary income — but contributions and converted amounts always come out first, and tax-free. Miss the deadline and the penalty is 25% of the shortfall, cut to 10% if you fix it inside the two-year correction window. The exception most heirs miss: there is no required annual withdrawal from an inherited Roth. A Roth owner is always treated as dying before their required beginning date, so nothing is due until year ten.
Why Roth Inheritance Rules Changed
Until the SECURE Act, you could inherit a Roth and stretch distributions over your own life expectancy — a tax-free fountain that could run 50 years. The SECURE Act of 2019 killed that for most heirs, for deaths occurring after December 31, 2019. Now the 10-year rule applies, radically changing estate planning for Roth owners. (SECURE 2.0, passed in December 2022, did not change the 10-year window; what it changed was the penalty for missing it, from 50% down to 25%.)
| Scenario | Deaths before 2020 | Deaths after 2019 (SECURE Act) | Tax Impact |
|---|---|---|---|
| Inherit Roth IRA at age 35 | Stretch until age 90 | Must empty by age 45 | Lose decades of tax-free growth |
| Inherit before the 5-year mark | Taxable earnings | Still taxable earnings | No change, bad news |
| Spousal rollover | Become IRA owner | Become IRA owner (same) | No change, favorable |
| Estate tax impact | Roth still excluded | Roth still excluded | Advantage: heirs pay zero income tax |
Exception: Spousal Heirs Get Better Terms
If your spouse inherits your Roth, they can roll it into their own Roth (or treat it as their own). No 10-year deadline. They inherit your Roth as if it's theirs. This is the reason married couples often name spouses as primary beneficiaries.
The Other Exception: Eligible Designated Beneficiaries
The 10-year rule is the default for "designated beneficiaries," but the statute carves out five categories of eligible designated beneficiary (EDB) who may still stretch withdrawals over life expectancy. If you are one of them, the 10-year clock does not start at all:
| Eligible designated beneficiary | What they get instead of the 10-year rule |
|---|---|
| Surviving spouse | Treat the Roth as their own, or stretch over their own life expectancy |
| Minor child of the account owner | Life-expectancy withdrawals until age 21, then a 10-year clock starts — so the account must be empty at 31 |
| Disabled individual (§72(m)(7)) | Life-expectancy stretch |
| Chronically ill individual (§7702B(c)(2)) | Life-expectancy stretch |
| Anyone not more than 10 years younger than the owner | Life-expectancy stretch — this covers most siblings and partners of a similar age |
Two traps here. A grandchild is not a minor child of the owner, so a grandchild gets the plain 10-year rule no matter how young. And an EDB who chooses the 10-year rule cannot switch back later — the election is made when the first distribution is taken (or by the deadline for taking one), and it is permanent.
If you are the 10-years-younger sibling of a deceased account owner, the stretch is worth real money: use the inherited IRA RMD calculator to compare the life-expectancy schedule against emptying the account in ten years, because the difference in years of tax-free compounding is usually larger than any tax saving.
Common Mistakes (Do This, Not That)
❌ Mistake 1: Losing track of the deadline entirely
The 10-year rule says you must be empty by December 31 of the tenth year — and the clock counts from the year after death, so an inheritance in 2026 means an empty account by December 31, 2036. Heirs who set no reminder discover the deadline in year eleven, when the only remaining question is how large the penalty is.
✅ Fix: Pick a pace in year one and automate it. To be clear about the law: an inherited Roth IRA has no required annual distribution inside the 10-year window. A Roth owner is always treated as dying before their required beginning date, so the annual-RMD requirement the IRS finalised in July 2024 — which does apply to many inherited traditional IRAs — never reaches a Roth. Spreading withdrawals is a planning choice, not a compliance one, and for a Roth the usual right answer is the opposite: leave it invested as long as you can.
❌ Mistake 2: Not distinguishing the 5-year rule from the 10-year rule
There are two separate timelines: (1) The original Roth owner's 5-year holding period (affects whether earnings are taxable), and (2) The inheritor's 10-year drain deadline (affects when you must be empty). Confusing them costs money.
✅ Fix: Ask yourself: "Did the original account holder open their first Roth IRA at least five years before death?" If yes, everything you withdraw is tax-free. If no, only contributions and converted amounts are — and Roth ordering rules pull those out first, so you have room to withdraw without touching earnings while the clock finishes running. The five-year clock does not restart on your inheritance; it carries over and keeps ticking.
❌ Mistake 3: Missing the December 31 deadline in year 10
One day late and §4974 applies a 25% excise tax on the amount you should have withdrawn — reduced to 10% if you take the missed distribution and file Form 5329 within the two-year correction window.
✅ Fix: Withdraw the full remaining balance by December 15 in year 10 (leaving a buffer for settlement delays). Not December 31—December 15. If you do miss it, file Form 5329 with a statement of reasonable cause; the IRS has routinely waived the penalty for heirs who corrected promptly.
Step-by-Step Checklist
- Determine whether you're the spouse, an eligible designated beneficiary, or a plain non-spouse heir (three different rule sets)
- If spouse: Decide whether to roll the inherited Roth into your own Roth or treat it as your own (either way, no 10-year deadline)
- If non-spouse: Verify the original account holder opened their first Roth IRA 5+ years before death — ask the custodian for the account opening date in writing
- Retitle the account correctly ("Jane Doe, deceased, IRA FBO John Doe, beneficiary"). Titling it in your own name is treated as a full distribution and cannot be undone
- Calculate total balance in the inherited Roth IRA
- Decide a drain schedule — a level tenth each year, or leave it invested and empty it in year 10. For a Roth, later is usually better; there is no annual requirement to work around
- File Form 8606 (Part III) only for a year in which the distribution is not qualified. If the deceased's five-year clock is satisfied, no Form 8606 is needed
- By December 15 of year 10, verify account balance is zero
- Keep all brokerage statements and the custodian's confirmation of the original opening date—the IRS may cross-check
Worked Example: $400,000 Inherited Roth, Two Schedules
Your father dies in 2026 having opened his first Roth IRA in 2009, so the five-year clock is long satisfied and every distribution is qualified. You inherit $400,000 and must be empty by December 31, 2036. You don't need the money, so the question is only where it sits. Assume 7% a year in both accounts, and that money you take out goes into a taxable brokerage account where 15% of each year's return goes to capital gains tax — a 5.95% net return outside the Roth.
| Strategy | What you do | Total value at the end of 2036 | Federal tax on the Roth withdrawals |
|---|---|---|---|
| Level drain | Empty an equal share each year — about $42,800 in 2027, rising to $78,700 in 2036 — and reinvest it outside | ~$753,000 | $0 |
| Full deferral | Nothing until 2036, then withdraw the whole balance | ~$787,000 | $0 |
Both are tax-free. Deferral ends about $34,000 ahead — a little over 4% — entirely because gains that stayed inside the Roth were never taxed. That is the opposite of the standard inherited-traditional-IRA advice, where spreading withdrawals across ten years is the whole game, and it is the single most valuable thing to understand about an inherited Roth. Model your own balance, horizon and return assumption in the retirement calculator — the gap widens with a higher return and with a higher tax rate on the outside account.
The advice flips only if the five-year clock was unfinished at death. Then the earnings sitting on top of contributions are ordinary income when they come out, and the taxable slice grows every year you wait. In that case, empty the account as soon as the five-year clock matures — usually within a year or two — rather than at the end.
What This Doesn't Cover
- Trusts named as beneficiary. A trust may or may not qualify as a "see-through" trust with designated beneficiaries. A non-qualifying trust falls back to the five-year rule, not the ten-year rule. This needs an estate attorney, not a checklist.
- Inherited Roth 401(k)s. These follow plan rules until they are rolled to an inherited Roth IRA, and some plans force a faster payout than ten years. Ask the plan administrator before you do anything else.
- State income tax on unqualified earnings. Most states follow the federal treatment, but not all; the eight states with no income tax make the question moot.
- Estates and non-person beneficiaries. If no beneficiary was named and the estate inherits, the five-year rule applies instead of the ten-year rule.
Tax Planning Opportunity
If you inherit a Roth and have an old traditional IRA, this is the time to think about converting the traditional IRA (they're separate accounts). Because a qualified inherited Roth distribution adds nothing to your taxable income, it leaves your bracket empty for conversion room — you can convert traditional IRA dollars at 12% or 22% in the same years you are living off tax-free inherited Roth money. Size the conversion against your remaining bracket room with the Roth conversion calculator, and check which band you land in with the tax bracket explainer.
FAQ
Q: If I inherit my mom's Roth when I'm 22, and it has $400K, do I owe tax if I withdraw it all this year?
A: Only if your mom opened her first Roth IRA less than 5 years before death. If the five-year clock was satisfied, you withdraw the whole $400K tax-free — the distribution is qualified and never appears in your taxable income. If it was not, the Roth ordering rules still let you take out her contributions and conversions tax-free first; only the earnings on top are taxed as ordinary income. The 10-year deadline governs when the account must be empty, not whether the money is taxed.
Q: Can I let the inherited Roth sit untouched for 9 years, then withdraw everything in year 10?
A: Yes — and for a Roth that is usually the better answer, not the worse one. There is no annual required distribution from an inherited Roth, because a Roth owner is always treated as dying before their required beginning date. A qualified inherited Roth distribution is not income at all, so there is no bracket to spread it across and no reason to pull money out of a tax-free account early. The only cases for spreading are an unqualified Roth whose earnings would be taxable, or a fear you will forget the year-10 deadline.
Q: What if I inherit a Roth from my grandparent—do I get special treatment?
A: Usually not. The minor-child exception applies only to a child of the account owner, so a grandchild of any age gets the plain 10-year rule. The exceptions that could still apply to a grandchild are disability, chronic illness, or being within 10 years of the grandparent's age — none of which is common. Only a surviving spouse can roll the Roth into their own account.
Q: If I die before draining the inherited Roth, what happens to the remaining balance?
A: Your own beneficiary — the "successor beneficiary" — inherits it and must finish your 10-year period, not start a new one. If you die in year 6, they have four years left. The clock does not reset. This is one of the most common misunderstandings about inherited IRAs and it is worth telling your own heirs the original date of death.
Q: Does the inherited Roth count toward my annual contribution limit?
A: No. Inherited IRAs are entirely separate from contribution limits. The 2026 IRA limit of $7,500 ($8,600 if you are 50 or older) applies only to IRAs you personally fund with your own earned income. You also cannot add money to an inherited IRA — it can only shrink.
Q: Can I roll the inherited Roth into my own Roth IRA?
A: Only if you are the surviving spouse. Every other beneficiary must keep it as a separate inherited Roth IRA, correctly titled with the deceased owner's name. Moving it into an account in your own name is treated as a complete distribution of the whole balance and cannot be reversed — the account stops being an IRA that day.
Next Steps: If you've just inherited a Roth, do three things this week. Ask the custodian, in writing, when the deceased opened their first Roth IRA — that one date decides whether every future dollar is tax-free. Confirm the account is retitled as an inherited IRA in the deceased's name for your benefit, never in your own name. Then put one calendar reminder on 1 December of the tenth year and a second one a year earlier. Everything else is a preference; those three are the ones that cost money if you get them wrong.