How Long Do You Have to Distribute an Inherited Roth IRA?

How long do you have to distribute an inherited Roth IRA

Assuming control of an inherited IRA can be complex. Rules vary depending on who and why you inherit from. Beneficiaries generally must clear out their account within 10 years or face possible sanctions from their bank or broker.

However, some individuals receive preferential tax treatment. They are known as eligible designated beneficiaries and include minor children up to age 21, chronically ill individuals or those living with disabilities.

Five-year rule

The five-year rule is a time-based calculation that requires beneficiaries who inherit an IRA from a deceased parent to withdraw all of its balance within 10 years after that person’s death. Prior to 2020, non-spouse beneficiaries could use estate planning strategies in order to stretch out distributions over their life expectancies; this option has now been eliminated with the 2019 SECURE Act.

Tax calculations on an inherited IRA depend on its type, as well as the age at the time of death of its account owner. Investment earnings within an IRA account are taxed at ordinary income rates rather than capital gains rates.

Create a plan for inheritance can help beneficiaries avoid making short-term decisions that don’t meet their long-term goals. This may include setting up an IRA or other accounts to manage it, while setting up a budget will also help manage funds effectively and prevent overspending.

10-year rule

The 10-year rule is an important consideration for beneficiaries of IRA accounts. Both traditional and Roth funds must be withdrawn within 10 years after an account owner passes away, in order to avoid high tax rates. Exact timing depends on each beneficiary and whether or not they are married; for surviving spouses this could involve using the RMD life expectancy or rolling assets into a separate IRA; beneficiaries could withdraw small amounts every year or one lump sum at the end of 10 years.

The 10-year rule also applies to minor children and beneficiaries who are disabled or chronically ill, providing they empty their inherited IRA by December 31 of the tenth year after original account owner’s death. Withdrawals made prior to age 59 1/2 are subject to taxation as well as an early withdrawal penalty of 10%.

Life expectancy rule

If a deceased IRA account owner passes before reaching their RMD, their heirs have various withdrawal options available to them. One option would be converting the assets into a beneficiary IRA that allows distributions based on life expectancies; this must be done by December 31 of the year after death.

This option may be utilized by either a surviving spouse or eligible designated beneficiary; minor children cannot use this approach. Their life expectancy will be calculated using the IRS Single Life Expectancy Table; each subsequent year of distributions requires subtracting one from this figure.

Surviving spouses can roll their share into their own IRA, though early withdrawal penalties may apply in certain instances. Beneficiaries may want to consider adopting the 10-year rule which calls for annual distributions until all funds have been depleted from an inherited IRA.


As soon as you inherit an IRA or Roth IRA, it is crucial that you understand its rules. For instance, required minimum distributions (RMDs) must be taken within one year after your parent passes if they were an IRA owner and calculated using IRS life expectancy tables before being reviewed annually.

Beneficiaries have four options when distributing an inherited IRA to beneficiaries. One approach would be to convert it to an Inherited IRA and begin taking annual distributions based on either the original account holder’s single life expectancy or deceased spouses remaining lifespan as determined by IRS life expectancy tables.

Distribute funds over five years as another option if an account owner died before starting to take RMDs, but note that this won’t work with non-designated beneficiaries; consult with an advisor to find the right solution.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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