Converting an Inherited IRA to a Roth: What the Rules Allow

Yes, you can convert an inherited IRA to a Roth, but the rules depend on who left it to you

You can convert an inherited traditional IRA to an inherited Roth IRA, but the IRS treats conversions differently depending on your relationship to the person who died. If the deceased was your spouse, you have the most flexibility—you can treat the inherited IRA as your own and convert it like any other Roth conversion. If the deceased was not your spouse, you can still convert, but you must keep the account separate and follow stricter withdrawal rules.

The conversion itself works the same way: you move money from the inherited traditional IRA to an inherited Roth IRA, pay income tax on the amount converted in that tax year, and the money then grows tax-free. The catch is that non-spouse beneficiaries face a 10-year deadline to empty the account entirely, regardless of whether they convert or not. This deadline comes from the SECURE Act, which changed inherited IRA rules starting in 2020.

Key Takeaways

• Spouse beneficiaries can convert an inherited IRA to a Roth and treat it as their own account, with no special deadline beyond normal retirement account rules.
• Non-spouse beneficiaries can convert an inherited traditional IRA to an inherited Roth, but must withdraw all money by the end of the tenth year after the account owner's death.
• You pay income tax on the full amount converted in the year you convert it, which can push you into a higher tax bracket.
• An inherited Roth grows tax-free, but non-spouse beneficiaries must still take distributions and cannot delay withdrawals indefinitely.
• The conversion does not reset the 10-year deadline—non-spouse beneficiaries still must empty the account within ten years of the original owner's death.

How the conversion works if you inherited from your spouse

If your spouse left you an IRA, you can treat it as your own by rolling it into your own IRA or designating yourself as the account owner. Once you do that, the inherited IRA rules no longer apply—you can convert to a Roth using the standard conversion process, and you can take distributions whenever you want after age 59½ without penalty.

This is the simplest path because you get all the same options a non-inherited account offers. You are not locked into a 10-year window, and you can spread conversions across multiple years if that makes sense for your tax situation. The trade-off is that you pay income tax on whatever you convert, just like any other Roth conversion.

How the conversion works if you inherited from someone other than your spouse

If you inherited an IRA from a parent, sibling, or other non-spouse, you cannot treat it as your own. The IRS requires you to keep it in an inherited IRA account in the deceased person's name, with you listed as the beneficiary. You can still convert money from this inherited traditional IRA to an inherited Roth IRA, but the conversion must happen within the 10-year window that started when the account owner died.

The 10-year rule means you must withdraw all money from the inherited account by December 31 of the tenth year after the owner's death. A conversion does not extend this deadline or reset the clock. If the original owner died in 2023, you must have the account empty by December 31, 2033, whether you convert or not. Converting to a Roth does not change that timeline.

Tax consequences of converting an inherited IRA

When you convert an inherited traditional IRA to a Roth, you owe federal income tax on the full amount converted in that tax year. If the inherited IRA holds $100,000 and you convert $50,000, you add $50,000 to your taxable income for the year. This can push you into a higher tax bracket and may trigger other tax consequences, such as higher Medicare premiums or reduced deductions.

The tax bill is due when you file your return for the year of conversion—the money does not come out of the IRA itself. You have to pay it from other funds. Many people convert in smaller chunks over several years to spread the tax hit across multiple years and stay in a lower bracket. For non-spouse beneficiaries, spreading conversions across the 10-year window can be a smart strategy.

One exception: if the inherited IRA already holds after-tax contributions (non-deductible contributions the original owner made), part of the conversion may not be taxable. This requires tracking basis carefully, and you should consult a tax professional if the account contains a mix of pre-tax and after-tax money.

Required distributions from an inherited Roth

After you convert to an inherited Roth, you still must take distributions. The rules differ based on your relationship to the deceased and when they died. If you inherited from your spouse and rolled the Roth into your own account, you follow standard Roth rules—no required distributions during your lifetime, and you can withdraw anytime tax-free after the conversion money has been in the Roth for five years.

If you inherited from a non-spouse, you must take distributions based on your life expectancy, using IRS life expectancy tables. These distributions are calculated annually and are tax-free (because you already paid tax on the conversion). You must also empty the account entirely by the end of the 10-year window. If you have not taken enough distributions by year 10, you must withdraw the remaining balance to meet the deadline.

The five-year rule for converted funds

Money you convert to a Roth must sit in the Roth for five years before you can withdraw the converted amount tax-free and penalty-free. This is separate from the 10-year deadline for non-spouse beneficiaries. If you convert in 2024, the five-year period runs through 2028. You can withdraw the converted amount starting in 2029 without owing a 10% early withdrawal penalty, even if you are under 59½.

The five-year rule applies to each conversion separately. If you convert $20,000 in 2024 and another $20,000 in 2025, the first conversion is available penalty-free in 2029, and the second in 2030. For non-spouse beneficiaries, this matters because you have only ten years to empty the account. If you convert late in that window, you may not have five years for the money to sit before you must withdraw it to meet the 10-year deadline.

When a conversion makes sense for inherited IRAs

Converting an inherited traditional IRA to a Roth locks in a tax bill now but creates tax-free growth for the rest of the distribution period. This is most valuable if you expect to be in a lower tax bracket in the year of conversion than you will be during distributions, or if you want to leave tax-assistance programs to your own heirs.

For non-spouse beneficiaries, a conversion can also be strategic because you must withdraw all the money within ten years anyway. If you convert gradually over those ten years, you spread the tax cost and may end up paying less total tax than if you took distributions as ordinary income. A conversion also removes the money from the inherited account, which can simplify record-keeping and reduce the chance of missing a required distribution deadline.

Conversions make less sense if you are already in a high tax bracket or if the inherited IRA is small. Converting a $15,000 inherited IRA might push you into a higher bracket for no lasting benefit, especially if you could take distributions over ten years at a lower tax cost.

Documents and steps to convert an inherited IRA

To convert an inherited IRA, contact the financial institution that holds the inherited account. Tell them you want to convert the inherited traditional IRA to an inherited Roth IRA. They will provide a conversion form, which typically asks for the amount you want to convert and the destination Roth account (which can be at the same institution or a different one).

You will need the account statements showing the balance and the deceased person's tax identification number. The institution will issue a Form 1099-R for the conversion, which you report on your tax return. If you are converting only part of the account, the form will show the amount converted and the amount remaining. Keep copies of all conversion paperwork for your records, especially if you plan to convert in multiple years.

If you do not already have an inherited Roth IRA open, the institution will create one as part of the conversion process. The account must be titled in the deceased person's name, with you listed as the beneficiary—for example, "John Smith IRA (Deceased 2023) FBO Jane Smith, Beneficiary."

Frequently Asked Questions

Can I convert an inherited IRA if the original owner had a large balance?

Yes, there is no limit on the amount you can convert. However, converting a large balance in one year will create a large tax bill. Most people with large inherited IRAs spread conversions across multiple years to manage the tax impact. For non-spouse beneficiaries, you have ten years to work with, which gives you time to convert gradually.

What happens if I do not convert and just take distributions?

You can leave the money in the inherited traditional IRA and take distributions without converting. Non-spouse beneficiaries must still empty the account within ten years, but the distributions will be taxed as ordinary income. Conversions are optional—they make sense only if the tax math works in your favor.

Can I convert an inherited Roth IRA?

No. If you inherited a Roth IRA, it is already a Roth, and there is nothing to convert. You must take distributions from it following the same 10-year rule as a converted inherited IRA, but the distributions are tax-free because the original owner already paid tax on the contributions.

Does converting an inherited IRA affect my own Roth conversion strategy?

Yes. Any conversion—whether from your own IRA or an inherited one—adds to your taxable income for the year. If you are planning your own Roth conversion and inherit an IRA in the same year, converting both could push you into a much higher tax bracket. You may want to delay one conversion to a different year to spread the tax cost.

What if the inherited IRA is invested in something illiquid?

You can still convert, but you may need to sell the investment first to move the money to the Roth. Some institutions allow in-kind transfers of certain investments, but this is less common with inherited accounts. Ask the institution whether you can transfer the investment directly or whether you must liquidate it first.