Can You Convert an Inherited IRA to a Roth? Rules and Taxes

Roth IRAs are known for tax-free growth and distributions in retirement. However, inherited IRAs come with their own rules and limitations that can complicate the picture. Whether you can convert an inherited IRA to a Roth IRA depends on both your status and current IRS guidelines. By understanding IRS law, you can make strategic investment decisions based on key factors like taxes, timing and retirement income.

Ask a financial advisor for help navigating your retirement options based on your long-term financial goals.

An inherited IRA is a retirement account that you receive after the death of the original account holder. It is subject to special rules, depending on the beneficiary, the type of IRA (traditional or Roth) and when the original account owner passed away.

There are two main types of beneficiaries when it comes to inherited IRAs: spousal and non-spousal. This distinction affects how the account can be managed and what withdrawal rules apply.

Spousal beneficiaries have more flexibility. They can either treat the IRA as an inherited account or assume it as their own. Non-spousal beneficiaries, including children, other family members or trusts, are subject to different rules. They cannot treat the IRA as their own and are subject to stricter distribution rules.

The SECURE Act has made significant changes to the rules for inherited IRAs. Most notably, it eliminated the stretch IRA for non-spousal beneficiaries. Previously, these individuals could stretch required minimum distributions (RMDs) over their own lifetimes. Now, most non-spousal heirs must withdraw their entire inherited IRA within 10 years of the original owner’s death.

This 10-year rule does not apply to certain eligible designated beneficiaries. These include minor children, disabled and chronically ill persons and beneficiaries who are not more than 10 years younger than the decedent.

Everyone else must deplete the account within a decade, regardless of tax consequences.

You typically cannot convert an inherited IRA to a Roth IRA, especially if you are not the original account holder’s spouse.

The IRS prohibits non-spousal beneficiaries from converting inherited traditional IRAs to Roth IRAs. Once the account is inherited, it must follow the distribution rules associated with it. This restriction prevents non-spouse heirs from shifting pre-tax assets into Roth accounts after the original owner’s death.

However, there is one important exception: spouses who inherit a traditional IRA can choose to treat it as their own. If they do, that account can be converted to a Roth IRA, just as if it had always been theirs. This option is only available if the surviving spouse formally elects to treat the inherited IRA as their own, instead of a beneficiary account.

If you are a surviving spouse, you have more flexibility than any other type of IRA beneficiary.

One of your most powerful options is the ability to treat the inherited IRA as your own. This allows you to make contributions, delay RMDs until your own retirement age and even convert the account to a Roth IRA if you choose.

The timing of this decision matters. Younger spouses (under age 59½) may benefit from keeping the IRA as an inherited account to avoid early withdrawal penalties. Once they are older, they can assume ownership and proceed with Roth conversions on their terms.

Let’s say you are 55 years old and inherit your spouse’s $400,000 traditional IRA. You might keep the account as inherited for a few years, taking penalty-free withdrawals if needed. Once you reach 59½ or decide you no longer need access to the funds, you could assume the account. You can then begin a series of Roth conversions over time while carefully managing your tax brackets.

For non-spousal beneficiaries, such as adult children or other relatives, the rules are far more restrictive. The IRS does not allow you to convert an inherited IRA to a Roth IRA, no matter how beneficial it might seem for long-term tax planning.

Still, there are ways to work within the system. You must follow the 10-year withdrawal rule, but you can decide when and how much to withdraw each year. This gives you some control over your annual taxable income.

If you qualify based on income and other requirements, you can take withdrawals from the inherited IRA. You can then use the proceeds to make regular contributions to your own Roth IRA. In 2025, the standard Roth IRA contribution limit is $7,000 ($8,000 for those 50 or older).

For example, say you inherit a $200,000 traditional IRA from a parent. Over 10 years, you withdraw $20,000 annually. If you qualify, you could use up to $7,000 of that annual withdrawal to fund your personal Roth IRA. This is not the same as a conversion, but it still moves money from taxable space to tax-free growth.

If you are the original owner of a traditional IRA and want to leave a more flexible, tax-efficient legacy, Roth conversions during your lifetime can be a smart move. By converting to a Roth while you are alive, you pay the taxes now. This spares your heirs from having to do it later.

This strategy can be especially powerful if you are in a lower tax bracket today than your beneficiaries will be in the future. It also gives your heirs the benefit of tax-free withdrawals and removes the uncertainty of required minimum distributions.

For example, suppose you have a $500,000 traditional IRA and decide to convert $100,000 per year over five years. You stay within a manageable tax bracket and shift a significant portion of your retirement savings into Roth territory. When your heirs inherit the Roth IRA, they still have to follow the 10-year rule. However, they will not owe any income tax on withdrawal, assuming the account meets the five-year aging requirement.

This is where a financial advisor can be particularly valuable. They can model tax scenarios, evaluate bracket management and help you build a conversion schedule that benefits both you and your heirs.

Yes, but only if you treat the inherited IRA as your own. Once you assume ownership, you can convert to a Roth IRA like any other account holder.

No. Once you have taken a distribution from an inherited IRA, that money is no longer eligible for conversion. You may, however, be able to use it for a regular Roth IRA contribution if you meet income and eligibility requirements.

You cannot directly fund a Roth IRA with inherited IRA dollars. However, you can take withdrawals (which may be taxable) and use those funds to contribute to a Roth IRA, if eligible.

Yes. Even though Roth IRAs typically have no RMDs for the original owner, beneficiaries of inherited Roth IRAs must deplete the account within 10 years.

If you fail to withdraw the full balance within 10 years, the IRS may impose a penalty. This is equal to 25% of the undistributed amount, decreasing to 10% if corrected within two years.

The idea of converting an inherited IRA to a Roth IRA may seem appealing, especially for long-term tax savings. However, IRS rules are strict, and most non-spousal beneficiaries are not eligible. However, spousal beneficiaries have more flexibility and can treat the IRA as their own, allowing for Roth conversions under standard rules. For non-spouse heirs, strategic withdrawals and reinvestment in a Roth IRA (when eligible) can still provide some tax-efficient opportunities. 

• A financial advisor can help you better understand what you need to do in order to reach your long-term retirement goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Consider using a retirement calculator if you need help trying to estimate how much you need to save for retirement.

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