Ask the Expert: RMD rules for Roth IRAs

I know people must take required minimum distributions (RMDs) from their traditional IRAs. But am I right that there are no RMDs for Roth IRAs?

Not entirely. The owner of a Roth IRA never has to take distributions from the account. But some Roth beneficiaries have an RMD option.

Most beneficiaries must empty an inherited Roth IRA by the end of the 10th year after the owner's death, said Ed Slott, a Rockville Centre tax accountant. No distributions are required during those 10 years. (There’s no tax on distributions of the owner's contributions or conversions to the account. The earnings aren't tax-free until five years have passed since money first went into the account.)

But a special group of beneficiaries can choose to take RMDs over their own life expectancies instead of emptying an inherited Roth account in 10 years. They are the decedent's surviving spouse; his or her children — but not grandchildren — until the age of majority (age 18 in New York); disabled or chronically ill beneficiaries; and beneficiaries who are less than 10 years younger than the decedent.

Surviving spouses have an additional option, said Slott. They can remain on the inherited Roth as a beneficiary, or roll it into their own Roth IRA. The rollover is the better option in most cases, he added. But there are exceptions. As a beneficiary, for example, surviving spouses can take tax- and penalty-free withdrawals from an inherited Roth. But if they are younger than 59 ½, they couldn't yet take penalty-free distributions from their own Roth. The spouse "can remain a beneficiary and still have the option of doing a spousal rollover later on," said Slott.

The bottom line:

Most people must empty an inherited Roth IRA within 10 years, but some beneficiaries are allowed to take RMDs over their own life expectancies.

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