Inherited Roth IRA – Two part question
My father passed away in his early 90s in November of 2022, leaving his long-standing Roth IRA account (conversion) to my mother who was his sole beneficiary and also in her 90s (transfer upon death account designation). My mother’s inherited Roth account was not set up as a “spousal” account but rather as an “inherited” account naming my father as the original owner. My mother passed away in 2025 and left the account to my brother and I as her beneficiaries. No RMDs, withdrawals or other distributions were ever taken from the Roth accounts by either of my parents during their lifetimes.
We believe that my mother as a qualified beneficiary should not have been required to take RMDs, even though the account was not established as a spousal account, but we would certainly like this to be confirmed.
The second part involves us as successor beneficiaries (we are in our 60s). We discovered the issue with the inherited vs. spousal titling after my mother’s death when the assets were transferred to our inherited Roth accounts which name my father, versus my mother, as the account owner. Given this, we became concerned that the timeline for our disposal of the Roth assets may be now potentially be limited to 10 years from my father’s death vs. my mother’s, will welcome your insights on the appropriate timeline and how we should name our new inherited accounts.
Thanks very much.
Permalink Submitted by Alan - IRA critic on Wed, 2025-08-20 19:30
This is sort of an unusual situation. The beneficiary RMD provisions that apply to traditional IRAs also apply to Roth IRAs. In both cases, if a sole spousal beneficiary fails to complete their RMD, they are treated as having defaulted into ownership status with respect to the inherited IRA.
Your mother should have taken a beneficiary RMD for 2023, and because she did not do so, she defaulted into ownership status even though the Roth was never retitled in her name. Because of this, you and brother are not treated as successor beneficiaries, but as designated beneficiaries. This allows you to use the 10 year rule rather than having to complete the beneficiary RMD schedule of mother, which would have given you less than 10 years.
Because mother defaulted to ownership status, she did not have any RMDs as the Roth owner, including no year of death RMD for 2025. You should create a separate inherited Roth IRA from brother, but both of you become subject to the 10 year rule, meaning that you must drain the inherited Roths by the end of 2035. And because Mother passed prior to RBD (Roths have no RBDs for owners), you will have no annual beneficiary RMD until 2035 and you can let the inherited Roth grow tax free. All distributions that you do choose to take will be tax free, since the Roth had been held by father for over 5 years.
As for the proper titling of your inherited Roth IRA, custodians use different formats. Technically, the inherited Roth should be titled showing you as beneficiary of mother, not father because you inherited it from mother, and the 10 year rule starts in 2026 based on her year of death.
In short, the default rule allowing mother to default to ownership helped get you a few extra years to drain your inherited Roth IRA.
Permalink Submitted by Marie Douglass on Sat, 2025-08-23 14:17
This is an unusual issue and I appreciate the breadth and depth of your reply, but your response raises some follow-up questions.
My mother actively selected the wrong box (her own vs. spousal account) when she retitled my father’s account to her name with my father denoted as original owner, so not clear on your comment on the account defaulting to her ownership and therefore RMDs were required.
This is complicated certainly but I had thought that for Roth accounts, spouses are not required to take any distributions and non-spousal beneficiaries would not be required to take annual RMDs but would need to take full distribution within 10 years of date of death. Thinking was that my mother as spouse was a qualified beneficiary and so she did not need to take RMDs at all. Her estate is not settled so want to ensure that I understand the ramifications of your comments.
In regards to my brother and me, my mother’s financial institution insisted on using my father’s name as original owner on the inherited accounts established in our names, with no mention of my mother. My financial institution will establish the title as you note as appropriate when I transfer the funds but is this disconnect going to cause issues for my brother and me down the road in waiting to take distributions until year 10?
Will greatly appreciate any additional clarifications that you can provide.
Permalink Submitted by Marie Douglass on Thu, 2025-08-28 10:06
Good morning Alan, Will greatly appreciate any insights you can share in regards to the additional questions posed above.
Permalink Submitted by Alan - IRA critic on Thu, 2025-08-28 12:26
Inherited Roth IRAs are subject to the same RMD requirements as traditional IRAs per IRS Reg 1.408A-6 QA 14, so mother was required to take her first beneficiary RMD by the end of 2023. Because she did not do so, she defaulted to ownership status of the inherited Roth IRA at that time.
The default to ownership rules are described in IRS Reg 1.408-8(c)(iv)(2). This clearly states that a sole spouse beneficiary defaults to ownership upon failure to complete a beneficiary RMD, and is then treated as owning the inherited IRA for that entire year.
Therefore, mother defaulted to ownership and makes you a designated beneficiary rather than a successor beneficiary, and you fall under the 10 year rule. As such, you do not need to take any beneficiary RMDs before the total distribution requirement in 2035.
Your custodian’s flawed titling format showing you as beneficiaries of father does not change this, in fact it makes it look like you were designated beneficiaries of his from the start. But note that your 10 year rule does not start at his death, it starts in 2025 with mother’s death. You do not have to drain these inherited IRAs in 2032, you have until 2035.