Inherited Roth IRA: RMDs or No?

Are RMDs Required From Roth IRAs?

Roth IRA owners never face RMDs during their lifetime. Unlike traditional IRAs, which require distributions beginning at age 73 (as of SECURE Act 2.0), Roth IRAs are exempt from lifetime distribution requirements. Because of this exemption, the IRS treats every Roth IRA owner as if they died before their “required beginning date” (RBD), regardless of their actual age at death.

This rule plays a major role in determining RMD requirements for beneficiaries.

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Beneficiary Types Determine RMD Rules

There are two main categories of Roth IRA beneficiaries:

1. Eligible Designated Beneficiaries (EDBs)

2. Non-Eligible Designated Beneficiaries (NEDBs)

 Each group follows different rules when it comes to inherited Roth IRA withdrawals.

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1. RMDs for Non-Eligible Designated Beneficiaries (NEDBs)

Under the SECURE Act, NEDBs must follow the 10-Year Rule. This rule requires the entire account to be emptied by the end of the 10th year after the original account holder's death.

Good news: Because Roth IRA owners are always deemed to have died before their RBD, NEDBs do not have to take annual RMDs during years 1–9 of the 10-year window. This means the account can continue to grow tax-free until it is completely distributed by the end of year 10.

Example:

Jim, age 75, has a Roth IRA. During his lifetime, he takes no RMDs, as they’re not required. When he dies, he leaves his Roth IRA to Lucy, his 40-year-old granddaughter. As a granddaughter, Lucy is a non-eligible designated beneficiary.

Lucy must withdraw the entire Roth IRA by the end of year 10, but she does not have to take any specific amount in years 1–9. This allows her to potentially benefit from continued tax-free growth over the full decade.

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2. RMDs for Eligible Designated Beneficiaries (EDBs)

The SECURE Act allows EDBs to avoid the 10-year rule and instead stretch distributions over their own single life expectancy. However, this comes with a trade-off: EDBs must begin taking annual RMDs starting the year after the account owner’s death.

Even though Roth IRA distributions are tax-free, the IRS still requires EDBs to remove a portion of the account annually to prevent indefinite deferral of tax-advantaged growth.

Who qualifies as an EDB?

•  Surviving spouses
• Minor children of the account owner (until age of majority)
• Individuals who are chronically ill or disabled
• Beneficiaries not more than 10 years younger than the original owner

Example:

Jim dies at age 77 and names two Roth IRA beneficiaries:

• His brother Jack, age 69 (qualifies as an EDB)
• His granddaughter Lucy, age 40 (a NEDB)

Jack elects to use the lifetime stretch method. Based on his age, he will take annual RMDs for the next 19 years. Even though those distributions are tax-free, they are required each year.

Lucy, on the other hand, must follow the 10-year rule. She can wait until year 10 to take the entire amount or withdraw smaller portions along the way—but she is not required to take annual RMDs.

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Key Takeaways: Inherited Roth IRA Distribution Rules

 Roth IRA owners are never required to take RMDs during their lifetime. However, once inherited, these accounts must eventually be distributed, and the timeline depends entirely on the type of beneficiary. Non-eligible designated beneficiaries must follow the 10-year rule, which allows the inherited Roth IRA to grow tax-free for up to a decade but requires the entire account to be emptied by the end of the tenth year. These beneficiaries are not required to take annual withdrawals during that period. Eligible designated beneficiaries, on the other hand, may use the lifetime stretch option, which allows them to extend distributions over their life expectancy. The tradeoff is that they must begin taking annual RMDs starting the year after the original account holder’s death. Although these distributions are not taxable, failure to follow timing rules can lead to IRS penalties.

Common mistakes include assuming inherited Roth IRAs are exempt from all RMDs, when in fact beneficiaries may be subject to specific distribution rules. Eligible designated beneficiaries who fail to take their required annual distributions may face a 50 percent penalty on the missed amount. Non-eligible beneficiaries often overlook the 10-year deadline, putting them at risk of penalties if the account is not fully withdrawn on time. Another error occurs when eligible beneficiaries automatically choose the lifetime stretch without evaluating whether the 10-year rule might be more advantageous based on their personal financial circumstances. Careful planning is essential to avoid these errors and maintain the tax-free benefits of the inherited Roth IRA.

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FAQs: Inherited Roth IRA RMD Rules

Do beneficiaries of Roth IRAs have to take RMDs?
Not always. It depends on whether the beneficiary is an EDB or NEDB. Only EDBs using the stretch must take annual RMDs.

What is the 10-year rule for inherited Roth IRAs?
It requires non-eligible beneficiaries to fully distribute the account by the end of the 10th year after the original owner's death.

Are inherited Roth IRA RMDs taxable?
No. Distributions from Roth IRAs are tax-free if the account has met the 5-year rule, even when required.

Can a spouse roll over an inherited Roth IRA?
Yes. A surviving spouse can treat the inherited Roth IRA as their own and avoid RMDs altogether during their lifetime.

How do I know if I’m an EDB?
You're an EDB if you are a spouse, a disabled or chronically ill individual, a minor child of the account owner, or someone not more than 10 years younger.

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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.