Ask the Expert: What are the RMD rules for a Roth IRA?

When my adult children inherit my traditional IRA, I know they’ll have to empty it within 10 years. I’ve been told that because I’m already taking required minimum distributions (RMDs), my kids will also have to take RMDs from the IRA in years 1 through 9. Do the same rules apply when they inherit my Roth IRA?

No. Adult children who inherit a Roth IRA must empty the account within 10 years unless they qualify for an exception (see below), but they don’t have to take RMDs in years 1 through 9. They can let the account grow untouched until the end of the 10th year after your death.

And once five years have gone by since you first put money into the Roth account — regardless of whether your deposit was in the form of contributions or a conversion from a traditional IRA — all their withdrawals from the Roth IRA are tax-free.

Some beneficiaries are exempt from the 10-year rule, however. They can take RMDs from an inherited Roth IRA (or an inherited traditional IRA) over their own life expectancies if they wish.

These beneficiaries are “eligible designated beneficiaries.” They are: your surviving spouse; your minor children — but not your grandchildren — until they reach the age of majority (18 in New York); beneficiaries who are disabled or chronically ill; and beneficiaries not more than 10 years younger than you. For example, if you left your Roth IRA to your older brother, and your traditional IRA to a friend who is five years your junior, they’d both qualify for exemption from the 10-year rule.

The bottom line:

If your adult children inherit your Roth IRA, they generally must empty it by the 10th year after your death, but they can take as much or as little as they wish from the account in years 1 through 9.

More information:

bit.ly/3Y4RgeA

bit.ly/4bEt6gt