Roth IRAs are not subject to required minimum distributions during your lifetime, but your beneficiaries will be after you die

A required minimum distribution (RMD) is a withdrawal the IRS requires you to take from certain retirement accounts each year, starting at a specific age. Traditional IRAs, 401(k)s, and similar accounts trigger RMDs. Roth IRAs work differently: you never have to withdraw money while you are alive, no matter how old you are or how much money sits in the account. This is one of the largest advantages of a Roth IRA over a Traditional IRA.

However, the person who inherits your Roth IRA after your death will face RMD rules. The rules depend on who inherits it and when you died. Understanding this now helps you plan what happens to the account and lets your beneficiaries know what to expect.

Key Takeaways

  • You do not have to take any withdrawals from your Roth IRA while you are alive, regardless of your age or account balance.
  • Your spouse who inherits your Roth IRA can treat it as their own and avoid RMDs during their lifetime.
  • Non-spouse beneficiaries must withdraw the entire Roth IRA within ten years of your death if you died on or after January 1, 2020.
  • Withdrawals your beneficiaries take from an inherited Roth IRA are tax-free, even though they must eventually empty the account.

Why Roth IRAs have no RMD during your lifetime

The IRS created the RMD rule to may support people eventually pay taxes on money in tax-deferred accounts. Traditional IRAs and 401(k)s hold pre-tax contributions, so the IRS wants that money withdrawn and taxed. Roth IRAs hold after-tax contributions — you already paid income tax on the money you put in — so the IRS has no reason to force withdrawals while you are alive.

This means you can leave your Roth IRA untouched for decades if you do not need the money. The account continues to grow tax-free. You can withdraw whenever you want without penalty, and you can also leave the entire balance to your heirs. The flexibility is one reason people choose Roth accounts over Traditional accounts later in retirement.

What happens to a Roth IRA after you die: spouse inherits it

If your spouse inherits your Roth IRA, they have two main choices. They can treat the Roth IRA as their own by retitling it in their name. If they do this, they also inherit the no-RMD rule — they never have to withdraw money while they are alive. The account continues to grow tax-free until they die or decide to take money out.

Alternatively, your spouse can keep the account in your name and treat themselves as a beneficiary. This option is less common and comes with RMD rules, so most spouses choose to retitle the account as their own.

What happens to a Roth IRA after you die: non-spouse beneficiaries

Non-spouse beneficiaries — adult children, grandchildren, siblings, or anyone else — cannot treat an inherited Roth IRA as their own. They must follow the find Act rules that took effect January 1, 2020. Under these rules, most non-spouse beneficiaries must withdraw the entire Roth IRA balance within ten years of the account owner's death.

The ten-year window does not require equal annual withdrawals. A beneficiary could withdraw nothing for nine years and then take the entire balance in year ten. However, the account must be completely empty by December 31 of the tenth year after death. If the account owner died before January 1, 2020, older rules may explore, and a beneficiary should check with a tax professional about their specific situation.

The major benefit for non-spouse beneficiaries is that all withdrawals from an inherited Roth IRA are tax-free. Even though they must empty the account, they do not owe income tax on the money they withdraw. This is different from inherited Traditional IRAs, where withdrawals are taxed as ordinary income.

Exceptions to the ten-year rule for non-spouse beneficiaries

Some beneficiaries are exempt from the ten-year rule and can stretch withdrawals over their own lifetime. These include a surviving spouse (who can retitle the account), a beneficiary who is disabled or chronically ill, a beneficiary who is not more than ten years younger than the account owner, and minor children (until they reach age of majority). Each category has specific rules, and the rules changed after the find Act, so a beneficiary in one of these groups should consult a tax professional.

A minor child who inherits a Roth IRA can withdraw over their lifetime until they reach the age of majority in their state, usually 18 or 21. Once they reach that age, the ten-year rule kicks in, and they have ten years from that point to empty the account.

How to plan for what happens to your Roth IRA

You control who inherits your Roth IRA by naming a beneficiary on the account. This is a form your IRA provider gives you when you open the account, and you can update it anytime. The beneficiary designation overrides your will, so make sure the name and Social Security number are correct.

If you do not name a beneficiary, your Roth IRA becomes part of your estate and goes through probate. This slows down the inheritance process and can create tax complications for whoever eventually receives the money. Naming a beneficiary is free and takes minutes.

You can name multiple beneficiaries and split the account among them. You can also name a trust as beneficiary, though this adds complexity and usually requires a tax professional to set up correctly. Review your beneficiary designation every few years, especially after major life changes like marriage, divorce, or the birth of children.

Frequently Asked Questions

Can I withdraw from my Roth IRA without triggering an RMD?

Yes. Roth IRAs have no RMD during your lifetime, so you can withdraw as much or as little as you want, whenever you want. Withdrawals of contributions are always tax-free and penalty-free. Withdrawals of earnings may be tax-free if you meet the five-year holding period and age 59½ rule, but they do not trigger an RMD.

What if my beneficiary does not want to take withdrawals from the inherited Roth IRA?

Non-spouse beneficiaries must withdraw the entire balance within ten years, even if they do not need the money. The account cannot sit untouched. If the account is not empty by the important date, the beneficiary owes a 25% penalty on the amount that should have been withdrawn (reduced to 10% if corrected within two years). A tax professional can help plan withdrawals to minimize the tax impact.

Do I have to take an RMD from my Roth IRA if I am over 73?

No. The age at which RMDs begin for Traditional IRAs is 73 (as of 2023, though this may change). Roth IRAs have no RMD at any age during your lifetime. You can keep the money in the account as long as you live.

If I convert a Traditional IRA to a Roth IRA, do I have to take an RMD first?

You must take your RMD from the Traditional IRA for that year before converting, or you can convert the account after taking the RMD. You cannot use a conversion to avoid taking an RMD that is already due. Once the money is in the Roth IRA, no RMD applies to you during your lifetime.

Are inherited Roth IRA withdrawals taxable to the beneficiary?

No. Withdrawals from an inherited Roth IRA are always tax-free to the beneficiary, even though they must withdraw the entire balance within ten years. This is a major advantage over inheriting a Traditional IRA, where all withdrawals are taxed as ordinary income.