Roth IRA Inheritance: Spouse vs. Non-Spouse Options Explained

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A Roth IRA can’t carry a transfer-on-death (TOD) registration the way a taxable brokerage account can. The beneficiary designation form does the same job. Whoever is named on that form receives the account directly when the owner dies, outside probate and regardless of what the will says.

What happens next depends on who inherits:

• A surviving spouse has the most choices, including treating the Roth IRA as their own. A spouse who does that never has to take required minimum distributions (RMDs).
• Most other individual heirs must empty the account by the end of the 10th year after the owner’s death.
• A small group of “eligible designated beneficiaries” can stretch withdrawals over their life expectancy.
• Estates and some trusts generally face a five-year deadline.

Under all of these paths, withdrawals of the owner’s contributions are tax-free. Earnings are also tax-free once the account meets the Roth five-year holding period.

Naming a Roth IRA beneficiary

When you open a Roth IRA, the custodian asks you to name one or more primary beneficiaries and, optionally, contingent beneficiaries who inherit if the primaries have died or decline the assets. You can split the account by percentage among several people and usually change beneficiaries at any time.

Because the designation passes the account by contract, it overrides a will. A former spouse still named on the form can inherit even if the will says otherwise. Review the form after marriage, divorce, a birth or a death in the family.

If no beneficiary is named, or every named beneficiary has died, the custodian’s account agreement decides who inherits. That is often the owner’s estate. The account then goes through probate, and the estate is a non-designated beneficiary. It loses access to the 10-year and life-expectancy options and generally must use the five-year rule described below.

Naming a trust is possible and is common when the heir is a minor or needs oversight. A trust that meets IRS “see-through” requirements is treated as if its individual beneficiaries inherited directly, which can preserve the 10-year or life-expectancy treatment. A trust that doesn’t qualify is treated like an estate.

What happens to a Roth IRA when the owner dies

The account doesn’t simply become the heir’s regular Roth IRA. Unless a spouse elects to treat it as their own, the assets move by direct trustee-to-trustee transfer into an inherited Roth IRA (sometimes called a beneficiary Roth IRA). It is titled in the deceased owner’s name for the benefit of the heir. A non-spouse beneficiary can’t use a 60-day rollover or merge the money into their own Roth IRA, and no new contributions can be made to the inherited account.

A Roth IRA has no RMDs during the owner’s lifetime, so the full balance can grow tax-free for heirs. After death, the distribution rules depend on the beneficiary’s category. They apply to deaths after December 31, 2019. Beneficiaries who inherited before 2020 generally keep the older lifetime “stretch” rules.

When several beneficiaries share one account, they can split it into separate inherited accounts by December 31 of the year after the year of death. Each heir can then follow the rules for their own category. If they don’t split it, life-expectancy calculations use the oldest beneficiary’s age.

Inheritance options for a surviving spouse

A spouse can choose among four routes, depending mostly on age and on when the money will be needed.

Option 1: Treat the Roth IRA as your own

The spouse either retitles the account in their name or moves the assets into their existing Roth IRA. After that, it is simply the spouse’s Roth IRA:

• No RMDs for the rest of the spouse’s life.
• The spouse names their own beneficiaries, so the next generation inherits from the spouse.
• Contributions can be withdrawn at any time.
• Earnings are tax-free and penalty-free only in a qualified distribution: the spouse is 59½ or older (or meets another exception), and the five-year period is met. For a spouse treating the account as their own, the five-year period ends at the earlier of the deceased owner’s clock or the spouse’s own Roth clock.
• This option is available only to a spouse who is the sole beneficiary with unrestricted access to the account.

The trade-off is the early withdrawal penalty. Once the account is the spouse’s own, earnings taken before 59½ can trigger the 10% penalty and income tax, which wouldn’t apply in an inherited account.

Option 2: Keep an inherited Roth IRA and use life-expectancy payments

The spouse keeps the money in an inherited Roth IRA and takes annual distributions based on their life expectancy. A spouse can delay the first payment until the later of:

• December 31 of the year after the owner’s death, or
• December 31 of the year the deceased owner would have reached RMD age (currently 73).

Withdrawals aren’t subject to the 10% penalty at any age. Earnings are tax-free if the deceased owner’s five-year period has been met. The balance keeps growing tax-free, and the spouse can name a beneficiary for the account.

This route suits a younger spouse who might need money before 59½. The spouse can still elect to treat the account as their own later.

Option 3: Use the 10-year rule

A spouse can also choose to withdraw the full balance by December 31 of the 10th year after the year of death, on any schedule. This is rarely the most flexible choice for a spouse, but it is available.

Option 4: Take a lump sum

The spouse can withdraw everything at once. Contributions come out tax-free. Earnings are taxable only if the owner’s Roth IRA hadn’t satisfied the five-year rule. There is no penalty, but the tax-free growth ends.

Options for non-spouse beneficiaries

Non-spouse heirs include adult children, grandchildren, nieces and nephews, siblings, friends, and entities such as trusts, estates and charities. Their options depend on which category they fall into.

Eligible designated beneficiaries: life-expectancy payments

Four groups of non-spouse individuals can still take distributions over their life expectancy:

• The owner’s minor child. This covers the owner’s own child only, not a grandchild, niece or nephew. Life-expectancy payments apply until the child turns 21. The 10-year clock then starts.
• A disabled individual, as defined in the tax code.
• A chronically ill individual.
• An individual not more than 10 years younger than the owner, such as a sibling, partner or friend close in age.

Annual distributions must begin by December 31 of the year after the year of death. An eligible designated beneficiary can choose the 10-year rule instead.

Other individuals: the 10-year rule

Every other individual beneficiary, including most adult children and any minor who isn’t the owner’s child, must withdraw the entire inherited Roth IRA by December 31 of the 10th year after the year of the owner’s death.

A Roth IRA owner is always treated as dying before their required beginning date. Because of that, inherited Roth IRAs under the 10-year rule have no required withdrawals in years one through nine. The beneficiary can take money in any pattern, or wait and take it all in year 10. Delaying keeps the balance growing tax-free for longer, as long as the five-year requirement is met by the time earnings come out.

Estates, charities and non-qualifying trusts: the five-year rule

A beneficiary that isn’t an individual or a see-through trust has to empty the account by December 31 of the fifth year after the year of death. This includes an estate that inherits by default.

Lump sum

Any non-spouse beneficiary can also withdraw the full balance immediately, with the same tax treatment as a spouse’s lump sum.

How taxes work on inherited Roth withdrawals

Two different “five-year” ideas show up here, and they shouldn’t be confused:

1. The five-year deadline is a distribution deadline for non-designated beneficiaries such as estates.
2. The five-year holding rule decides whether earnings are tax-free. The clock starts on January 1 of the tax year of the owner’s first contribution to any Roth IRA, and the beneficiary inherits that start date.

Withdrawals follow the standard Roth ordering: contributions first, then conversions, then earnings. If the owner opened the Roth IRA recently, a beneficiary can often take the contributions out tax-free right away and leave the earnings in place until the five-year period is complete. Age doesn’t matter for an inherited account: a 30-year-old heir pays no 10% penalty.

Examples

The examples below are hypothetical and illustrate the mechanics only.

Example 1: Younger surviving spouse

Maria, 52, is the sole beneficiary of her husband’s Roth IRA, which he funded for 15 years. If she treats it as her own, any earnings she withdraws before 59½ could face tax and the 10% penalty. She keeps it as an inherited Roth IRA instead and draws on it penalty-free if needed. At 60, she elects to treat it as her own and stops taking any required distributions.

Example 2: Adult child under the 10-year rule

James, 45, inherits his mother’s Roth IRA in 2025. She died that year, so his deadline is December 31, 2035. He has no annual minimums, so he leaves the balance invested and plans to withdraw it in later years. Because his mother’s account was well past five years old, all of it comes out tax-free.

Example 3: Recently opened account

Priya inherits a Roth IRA her uncle opened two years before his death: $20,000 of contributions plus $3,000 of earnings. As a non-spouse heir more than 10 years younger, she is under the 10-year rule. She can withdraw the $20,000 at once tax-free. If she waits until the uncle’s five-year clock is complete before taking the $3,000, that amount is tax-free too.

FAQs

The Bottom Line

Roth IRA owners should keep their beneficiary forms current, since an estate that inherits by default faces a five-year deadline and goes through probate. A younger surviving spouse can keep the account as an inherited Roth IRA to avoid the 10% penalty, then treat it as their own later. Other heirs can take contributions tax-free right away and time earnings withdrawals around the five-year clock.