Please ensure Javascript is enabled for purposes of website accessibility

Do Roth IRAs Have RMDs?

By Catherine Brock – Updated Jan 9, 2023 at 8:16PM

The Roth individual retirement account (IRA) has some unique features. While other IRAs, including the traditional IRA, simplified employee pension (SEP) IRA, and Savings Incentive Match PLan for Employees (SIMPLE) IRA, are subject to required minimum distributions (RMDs), the Roth IRA is not. As long as you are alive, you can leave your money in a Roth IRA without incurring IRS penalties. Once you pass away, though, your Roth IRA beneficiaries will have a different set of distribution rules to follow.

Person using calculator on desk.
Image source: Getty Images.

No RMDs on Roth IRAs

For traditional, SEP, and SIMPLE IRAs, the IRS imposes required minimum distributions starting on April 1 of the year you turn age 72. The IRS calculates your minimum required withdrawal amount using two data points: the value of your IRA assets on December 31 of the previous year and your expected lifespan.

The purpose of RMDs is to make sure you pay taxes on the funds in your IRA since your contributions to those types of IRA accounts are initially tax-free. Because you don't get a tax break on contributions to your Roth IRA, qualified Roth IRA withdrawals are tax-free. There are no RMDs for Roth accounts because the IRS already collected its share.

RMDs on inherited Roth IRAs

The distribution rules for Roth IRAs do change once you pass away. The exact withdrawal requirements depend on who inherits your Roth fund. Your spouse, for example, can roll over the Roth assets into his or her own Roth IRA. The IRS does not impose RMDs on those inherited funds while your spouse is living.

Non-spouse beneficiaries, including children, don't have that rollover option. Those types of beneficiaries can either withdraw the funds immediately or transfer them to an inherited Roth IRA. Generally, moving the money to an inherited Roth IRA is the better choice because it enables the money to continue to grow on a tax-deferred basis.

Inherited Roth IRAs do have withdrawal requirements and, to complicate matters, these distribution rules have recently changed. For Roth IRAs inherited prior to Jan. 1, 2020, beneficiaries may take RMDs over their lifetimes (based on IRS life expectancy tables). But, following the passage of the SECURE Act in 2019, for IRAs bequeathed after 2019, most beneficiaries no longer have the option of receiving lifetime RMDs.

The exceptions are beneficiaries who are younger than the original account owner by 10 years or less, beneficiaries who are chronically ill or disabled, and minor children. Minor children can take RMDs until they reach legal age. Thereafter, they have 10 years to withdraw the remainder of the funds. Students may have the option to delay the start of the 10-year window until they reach age 26.

10-year rule for inherited Roth IRAs

If you inherit a Roth IRA in 2020 or later, then the account must be fully depleted within 10 years of the original owner's death. Withdrawals are tax-free provided that the funds have been in the account for five years or more.

Because a Roth IRA has no RMDs for the original owner, it's a powerful tool for building wealth and financial legacy. Your beneficiaries, too, will enjoy years of tax-deferred earnings growth after inheriting the account.

Related Retirement Topics

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
405%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 01/29/2023.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.