Inheriting a Roth IRA: Rules, Tax Treatment, and the Smart 10-Year Strategy (2026)

The 10-Year Rule: Same Deadline, Very Different Strategy

The SECURE Act (effective for deaths after December 31, 2019) imposed a 10-year distribution window on most inherited retirement accounts — traditional IRAs, Roth IRAs, inherited 401(k)s, and 403(b)s alike.¹ Under IRC § 401(a)(9)(H), a non-spouse designated beneficiary must fully deplete the inherited account by December 31 of the 10th year following the year of the original owner's death.

Example: Your mother dies in March 2025. You inherit her Roth IRA. Your 10-year window closes December 31, 2035. Everything in the account — contributions, conversions, and all growth — must be distributed by then.

Miss the December 31 year-10 deadline and the IRS imposes a 25% excise tax on the amount that should have been distributed but wasn't — reduced from 50% under SECURE 2.0.² Mark the calendar. The deadline does not move for any reason other than disaster relief waivers.

Why There Are No Annual RMDs for Inherited Roth IRAs

This is the most important and most frequently misunderstood point. Beginning in 2025, many beneficiaries of traditional inherited IRAs must take annual required minimum distributions in years 1 through 9 of their 10-year window — a rule clarified by IRS final regulations T.D. 10001 in July 2024.³

That annual RMD requirement does not apply to inherited Roth IRAs. Here is why:

In plain terms: you can take $0 from an inherited Roth IRA in years 1 through 9 and then take the entire balance in year 10 — completely legally and completely tax-free (assuming the 5-year rule is met). This is a significant financial advantage over an inherited traditional IRA, where annual RMDs may be mandatory and every distribution is taxed as ordinary income.

This rule applies regardless of how old the original Roth owner was when they died. Whether your parent died at 55 or 85, no annual distributions are required from the inherited Roth.

Are Distributions Really Tax-Free? The 5-Year Rule

In almost all real-world inherited Roth IRA situations, yes — distributions are fully income-tax-free. But there is one condition: the 5-year aging rule must be satisfied.

For a distribution from an inherited Roth IRA to be a "qualified distribution" (completely tax-free), the original owner must have held the Roth IRA for at least five years before their death.⁴ The five-year clock starts January 1 of the year the first contribution or conversion was made to that Roth IRA — not the actual contribution date.

Example: Your father made his first Roth IRA contribution in October 2019. His 5-year clock started January 1, 2019 and completed January 1, 2024. He died in 2025. Any distribution you take from his inherited Roth IRA is a qualified distribution — fully tax-free, including all earnings.

What if the 5-year requirement isn't met?

If the original owner died before their Roth IRA was 5 years old, the clock does not reset. You inherit the original clock. Contributions and converted amounts come out tax-free immediately (they already were taxed when contributed). Earnings on those contributions remain taxable until the 5-year clock completes.

In practice, this situation is rare. Most people open Roth IRAs in their 20s, 30s, or 40s and hold them for decades. A Roth IRA opened in 2024 that a 35-year-old dies owning in 2026 would have non-qualified earnings — but this edge case affects very few beneficiaries.

Eligible Designated Beneficiaries: Who Can Still Stretch

Five categories of beneficiaries — called Eligible Designated Beneficiaries (EDBs) — are exempt from the 10-year rule entirely and may take distributions over their own life expectancy instead.¹ For an inherited Roth IRA, the stretch option has less tax urgency (all distributions are tax-free anyway), but it allows for even longer tax-free compounding.

• Surviving spouse — has the most options; see the section below.
• Minor child of the decedent — biological or legally adopted children only; grandchildren do not qualify. Can stretch until reaching the age of majority (18 in most states), at which point the 10-year clock starts for the remaining balance.
• Disabled individuals — per the definition in IRC § 72(m)(7). Must be unable to engage in any substantial gainful activity due to a qualifying medical impairment.
• Chronically ill individuals — per IRC § 7702B(c)(2). Requires certification by a licensed health care practitioner.
• Any individual not more than 10 years younger than the account owner — calculated by birth year, not current age. A sibling born in 1963 inheriting from a sibling born in 1952 is exactly 11 years younger and does not qualify.

For an inherited Roth IRA, EDB status offers an added tax-compounding benefit: instead of a guaranteed 10-year end, the account can potentially grow tax-free over 20–30 more years if you are a qualifying EDB taking life expectancy distributions.

Surviving Spouse: The Best Inherited Roth IRA Option

A surviving spouse has a uniquely powerful option: rolling the inherited Roth IRA into their own Roth IRA (or treating it as their own). This is almost always the right move.

Alternatively, a surviving spouse may keep the account as an inherited IRA (keeping the 10-year rule or EDB life-expectancy option) or roll it into their own Roth 401(k) if their plan accepts rollovers. But the own-Roth-IRA rollover eliminates all distribution requirements for the spouse, making it the cleanest option in virtually every scenario.

Under-59½ caution: If you are under 59½ and need funds immediately, there may be a reason to keep the account as an inherited IRA rather than rolling it into your own — because distributions from an inherited IRA are penalty-free regardless of your age, whereas your own Roth IRA earnings are generally subject to the 10% early distribution penalty until age 59½ (unless the 5-year rule is met and you qualify for an exception). This is a narrow edge case, but worth confirming with an advisor if you're in that age range.

The Optimal Strategy for Most Beneficiaries

For most non-spouse beneficiaries subject to the 10-year rule, the optimal strategy for an inherited Roth IRA is the opposite of what you'd do with an inherited traditional IRA: take as little as possible for as long as possible, then withdraw everything in year 10.

With a traditional inherited IRA, spreading distributions across 10 years reduces your taxable income each year and keeps you in lower brackets. With a Roth, distributions are tax-free — so every year you leave the money in the account, it compounds tax-free. There is no "bracket management" to do. The longer it grows, the more tax-free wealth you receive.

Illustrative example: You inherit a $400,000 Roth IRA at age 45. The account earns 7% annually. If you take the entire balance in year 1, you receive $400,000. If you wait until year 10, the account grows to approximately $787,000 — and the entire $787,000 comes out tax-free. Waiting 9 extra years cost you nothing and almost doubled the value.

There are legitimate reasons to take earlier distributions — you need the cash, you're in a 0% tax year and want to convert to other vehicles, or you want to use the funds for a specific purpose. But if your financial situation allows it, deferring withdrawals maximizes the value of the tax-free inheritance.

Inheriting a Roth 401(k): Slightly Different Rules

Roth 401(k) accounts are increasingly common. If you inherited a Roth 401(k) rather than a Roth IRA, the same 10-year rule applies for non-spouse beneficiaries. However, there are some differences worth knowing:

• SECURE 2.0 eliminated lifetime RMDs on Roth 401(k)s starting in 2024 (§ 325).² Like Roth IRAs, Roth 401(k) owners now have no Required Beginning Date, so the same logic applies — no annual RMDs during your inherited Roth 401(k)'s 10-year window.
• Rollover to an inherited Roth IRA is generally advisable. Inherited Roth 401(k) funds can be rolled into an inherited Roth IRA, which gives you more investment flexibility and consolidates your inherited account management. Surviving spouses can roll the Roth 401(k) into their own Roth IRA.
• Plan-specific rules may be more restrictive. Some employer plans have their own distribution requirements. Contact the plan administrator before assuming you can defer all distributions.

5 Mistakes That Cost Inherited Roth IRA Beneficiaries Money

1. Taking a full distribution immediately

Cashing out an inherited Roth IRA on day one is almost never optimal. Even though distributions are tax-free, you permanently lose the tax-free compounding. A $500,000 Roth left to grow for 10 years at 7% becomes $984,000 — all tax-free. Taking it immediately forfeits nearly $500,000 of tax-free growth.

2. Confusing annual RMD rules between Roth and traditional

Reading about inherited IRA annual RMD requirements and assuming they apply to your Roth is a common and expensive mistake. Beginning in 2025, many traditional inherited IRA beneficiaries must take annual RMDs. You do not. Confirm with the custodian that no annual distributions are required for your inherited Roth IRA.

3. Missing the year-10 deadline

If you defer all distributions until year 10 — the optimal strategy for many — you must actually take the distribution by December 31 of that year. There is no grace period. Set a calendar reminder for year 9 at the latest so you can plan the withdrawal (and any tax-planning around it, especially if taking a large distribution that year will affect IRMAA brackets or other income-sensitive thresholds, even though the Roth distribution is income-tax-free).

4. Rolling into your own Roth IRA without considering age

Surviving spouses under age 59½ who immediately roll an inherited Roth IRA into their own Roth IRA lose the penalty-free distribution access that inherited IRAs carry. If you need income before age 59½, discuss timing with an advisor before completing the rollover.

5. Assuming the 5-year rule is satisfied without checking

Most inherited Roths are old enough that this is not an issue. But if the decedent opened the Roth IRA recently (within 5 years before death), verify when the account was opened before assuming all distributions are tax-free. Earnings on a Roth IRA opened less than 5 years before the owner's death are taxable until the 5-year clock completes.

When to Involve a Specialist

For a straightforward inherited Roth IRA — you're a designated beneficiary, the Roth is clearly over 5 years old, and you don't need the money immediately — the rules are simple enough to manage. But these situations add meaningful complexity:

• You inherited through a trust. Trust beneficiaries of inherited Roth IRAs may face different distribution rules than individual beneficiaries, including a 5-year rule (rather than 10) if the trust is a non-designated beneficiary. See our trust beneficiary guide.
• You're a surviving spouse considering the rollover decision. The rollover is usually right, but the under-59½ edge case and coordination with other retirement accounts warrants a quick review.
• You also inherited traditional IRAs, 401(k)s, or taxable accounts. Managing distributions across multiple inherited accounts — some taxable, some not — requires coordinated planning. An advisor can sequence withdrawals to minimize total lifetime tax across all accounts.
• The estate is large enough to have estate tax issues. The inherited Roth itself is income-tax-free to you, but it was included in the decedent's taxable estate if it exceeded the federal exemption ($15M in 2026 under the OBBBA).⁵ The IRD deduction may apply. See our inheritance and estate tax guide.
• You're an EDB who qualifies for the life expectancy stretch. The math on stretching vs. 10-year for an inherited Roth is less urgent (all tax-free), but it can still be worth optimizing, especially if you want to pass residual value to your own beneficiaries.