The Inherited Roth IRA and the 10-Year Rule: What Actually Applies
Here is a mistake I see constantly: someone inherits a Roth IRA and assumes the SECURE Act's 10-year rule does not apply to them. The logic feels sound. Roth money was already taxed. Roth owners never take RMDs. Surely the inheritance side works the same way? It does not. The inherited Roth IRA 10-year rule is very real, and misunderstanding it is how people end up with a 25 percent penalty on money that was supposed to be tax-free.
Yes, the 10-year rule applies to Roth IRAs
The SECURE Act, effective for deaths after 2019, ended the stretch IRA for most non-spouse beneficiaries of both traditional and Roth IRAs. If you are a non-eligible designated beneficiary, an adult child, a sibling, a friend, most trust beneficiaries, you must empty the inherited Roth IRA by December 31 of the 10th year after the owner's death. The tax-free character of the money does not exempt the account from the distribution timing rule. The deadline is the deadline either way.
There is one important mechanical difference from the traditional IRA version, and it is good news. Roth IRA owners are never required to take lifetime RMDs, which means they never had a required beginning date. The IRS therefore treats every inherited Roth IRA as if the owner died before their required beginning date. Under current guidance, that means no annual RMDs are required during years 1 through 9. You can take distributions in year 1, wait until year 10, skip years entirely, or draw annually. Your call, as long as the account is empty by the deadline.
The strategy this enables
Because there are no annual RMDs and withdrawals are generally tax-free, the winning move for most beneficiaries is simple: leave the money alone and let it compound tax-free for as close to ten years as possible, then withdraw it all at the end. This is the opposite of the traditional IRA playbook, where you usually spread withdrawals to manage tax brackets.
The 5-year rule: the one wrinkle
Withdrawals from an inherited Roth IRA are tax-free only if the account satisfies the 5-year rule. The clock starts in the year the deceased owner first funded any Roth IRA, and that holding period carries over to you. If at least five years have passed, everything, contributions and earnings, comes out tax-free.
If the account is younger than five years, the earnings portion of a withdrawal can be taxable as ordinary income, though contributions always come out tax-free. In practice, most inherited Roth IRAs have already cleared the five-year mark, since people usually open Roth accounts decades before they die. But if you inherited from someone who opened their first Roth at 78 and died at 80, check this before you withdraw earnings.
A worked example: the power of waiting
Say you inherit a $120,000 Roth IRA in 2026. The account is 12 years old, so the 5-year rule is satisfied. You take nothing for nine years and let it grow at a hypothetical 7 percent annually:
Year 10 balance: roughly $220,000, and the entire withdrawal is tax-free.
Compare that to inheriting a $120,000 traditional IRA and waiting until year 10: the same $220,000 would arrive as taxable income in a single year, likely pushing you into a much higher bracket. This is why, when someone inherits both types, the smart sequence is to take the required distributions from the traditional IRA first while letting the Roth sit.
Who is exempt: the eligible designated beneficiaries
The 10-year rule does not apply to everyone. Eligible designated beneficiaries can still stretch distributions over their life expectancy:
- A surviving spouse, who can also treat the inherited Roth as their own IRA or roll it into an existing account, and can continue making contributions
- A minor child of the deceased, until reaching the age of majority, after which the 10-year clock starts
- A disabled or chronically ill individual
- Someone not more than 10 years younger than the deceased
Non-spouse beneficiaries cannot add new contributions to an inherited Roth IRA. Only a surviving spouse who assumes ownership of the account can keep funding it.
Working out your own inherited IRA timeline?
Model the 10-year window and annual requirements.
Open the Inherited IRA RMD CalculatorFrequently asked questions
Does the 10-year rule apply to inherited Roth IRAs?
Yes. The SECURE Act 10-year rule applies to inherited Roth IRAs for deaths after 2019, just like traditional IRAs. The tax-free character of the distributions does not exempt the account from the timing rule.
Do I have to take annual RMDs from an inherited Roth IRA during the 10 years?
No. Because the original Roth owner was never subject to lifetime RMDs, the IRS treats the account as inherited from someone who died before their required beginning date, so no annual RMDs are required in years 1 through 9.
Are withdrawals from an inherited Roth IRA taxable?
Generally no, as long as the 5-year rule is satisfied. If the account was open less than five years, withdrawn earnings may be taxable, but contributions always come out tax-free.
What happens if I do not empty an inherited Roth IRA within 10 years?
The IRS can impose a penalty of 25 percent on the amount that should have been distributed. The account must be fully emptied by December 31 of the 10th year after the owner's death.
Related: Do You Have to Take Annual RMDs During the 10-Year Rule? · The $55,000 Tax Mistake: How to Spread Inherited IRA Distributions
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