Roth IRAs have different RMD rules than traditional IRAs

A Required Minimum Distribution (RMD) is the amount the IRS requires you to withdraw from a retirement account each year, starting at a certain age. For a traditional IRA, you must start taking RMDs at age 73 (as of 2023, after the SECURE 2.0 Act raised the age from 72). For a Roth IRA, the rules are simpler: you do not have to take RMDs during your lifetime, even after age 73.

This is one of the main advantages of a Roth IRA. You can leave the money in the account to grow tax-free for as long as you live, and you are never forced to withdraw it. This makes Roth IRAs useful if you do not need the money right away or want to pass the account to your heirs.

Key Takeaways

  • You do not have to take RMDs from your own Roth IRA while you are alive, no matter how old you are.
  • Your heirs who inherit a Roth IRA must take RMDs based on their age and relationship to you, with different timelines depending on whether they are spouses or non-spouses.
  • If you inherit a Roth IRA from someone else, you are subject to RMD rules even though the original owner was not.
  • The RMD calculation for inherited Roth IRAs uses life expectancy tables published by the IRS, and the amount depends on the beneficiary's age.

What happens to your Roth IRA after you die

Although you do not take RMDs during your lifetime, your beneficiaries will. The rules depend on who inherits the account and when they inherit it. A spouse who inherits a Roth IRA can treat it as their own and avoid RMDs. A non-spouse beneficiary (such as an adult child or grandchild) must take RMDs starting the year after your death.

The amount a non-spouse beneficiary must withdraw each year is based on their age and the IRS life expectancy tables. For example, if your 45-year-old daughter inherits your Roth IRA, she must calculate her RMD using her life expectancy factor and divide the account balance by that number. The calculation is the same as for a traditional IRA, except the withdrawals come out tax-free because Roth money has already been taxed.

Inherited Roth IRAs and the SECURE Act timeline

The SECURE Act (passed in 2019) changed the rules for most non-spouse beneficiaries. Instead of stretching withdrawals over their lifetime, most beneficiaries must now empty the inherited Roth IRA within 10 years of the original owner's death. During those 10 years, there are no required annual withdrawals — you can take money out whenever you want. But by the end of year 10, the account must be completely withdrawn.

There are exceptions to the 10-year rule. Surviving spouses, minor children, disabled beneficiaries, and chronically ill beneficiaries have different options and may be able to stretch withdrawals over a longer period. If you inherit a Roth IRA and fall into one of these categories, you should check the account custodian's records or speak with a tax professional to understand your specific timeline.

How to calculate an inherited Roth IRA RMD

If you inherit a Roth IRA from a non-spouse and are not covered by one of the exceptions, you must calculate your annual RMD using the IRS Single Life Expectancy Table. Find your age in the year after the original owner's death, locate your life expectancy factor, and divide the account balance (as of December 31 of the previous year) by that factor. The result is your RMD for that year.

For example: You inherit a Roth IRA with a balance of $100,000 on December 31. You are 50 years old in the year after the owner's death. The life expectancy factor for age 50 is 34.2. Your RMD is $100,000 ÷ 34.2 = $2,923.98. You must withdraw at least that amount by December 31 of that year. The next year, you recalculate using your new age and the new account balance.

The IRS publishes these tables in Publication 590-B, which is available on the IRS website. Your account custodian (the bank or brokerage holding the Roth IRA) may also calculate the RMD for you and send you a notice showing the amount due.

What happens if you miss an inherited Roth IRA RMD

If you inherit a Roth IRA and do not take the required withdrawal by December 31, the IRS charges a penalty. As of 2024, the penalty is 25% of the amount you should have withdrawn but did not. If you correct the mistake within two years, the penalty drops to 10%. For example, if your RMD was $3,000 and you missed it, the penalty would be $750 (25% of $3,000).

If you realize you missed a withdrawal, contact your account custodian right away and take the missed distribution as soon as possible. You may also want to file Form 5329 with your tax return to report the missed RMD and request a penalty waiver if you have a reasonable cause (such as not knowing the rule applied to you). The IRS has discretion to waive penalties in some cases.

Roth conversions and RMD rules

If you convert money from a traditional IRA to a Roth IRA, the conversion itself does not trigger an RMD. However, if you are already subject to RMDs from a traditional IRA (because you are over age 73), you must still take your RMD from the traditional IRA before or after the conversion. You cannot use a conversion to avoid taking an RMD.

Once the money is in the Roth IRA, the no-RMD rule applies to you during your lifetime. The conversion does not change that. Your heirs, however, will still be subject to RMD rules if they inherit the Roth IRA, just as they would with any inherited Roth account.

Frequently Asked Questions

Can I withdraw more than the RMD from an inherited Roth IRA?

Yes. The RMD is the minimum you must withdraw each year. You can take out more than that amount at any time without penalty. If you are subject to the 10-year rule, you can withdraw the entire balance in year one if you choose, as long as it is all gone by the end of year 10.

Do I have to take an RMD in the year the original owner dies?

No. RMDs for inherited Roth IRAs start in the year after the original owner's death. If the original owner died in 2024, your first RMD is due by December 31, 2025. However, if the original owner had already taken their RMD for 2024 before dying, that does not affect your timeline.

What if I inherit a Roth IRA from my spouse?

You can treat the inherited Roth IRA as your own. This means you do not have to take RMDs during your lifetime, just like with your own Roth IRA. You can also name new beneficiaries for the account. This option is unique to spouses and gives you the most flexibility.

Does the 10-year rule mean I have to withdraw money every year?

No. The 10-year rule means the account must be empty by the end of year 10, but there are no required annual withdrawals during those 10 years. You can take money out whenever you want, or wait until year 10 to withdraw everything at once. The choice is yours.

What if I do not know whether I inherited a Roth or traditional IRA?

Contact the account custodian (the bank or brokerage) directly. They have records of the account type and can tell you whether RMD rules apply. You can also ask for a copy of the account statement or the original account agreement, which will show whether it is a Roth or traditional IRA.