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How is an inherited Roth IRA taxed and what are the rules?

Inheriting a Roth IRA is one of the best inheritances tax-wise: qualified withdrawals are completely income-tax-free, because the original owner already paid tax on the contributions. A non-spouse beneficiary still falls under the SECURE Act's 10-year rule and must empty the account within a decade, but since the money comes out tax-free, there are no annual RMDs during those years – you can let it grow tax-free and withdraw it all in year 10. A spouse can instead treat the Roth as their own and never be forced to take distributions during their lifetime, letting it compound indefinitely. This is exactly why Roth conversions can be a powerful legacy strategy: you pay the tax now so your heirs inherit tax-free growth. See wealthserene.com/tools/roth-conversion.

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