How do tax treatment and RMDs differ between inherited traditional vs Roth IRAs in 2026?
Executive summary
Inherited traditional IRAs carry ordinary-income tax on distributions and generally require beneficiaries to take RMDs under the post‑2019 rules (often the 10‑year “clean‑out” or annual RMD schedules), while inherited Roth IRAs generally preserve tax‑free withdrawals for beneficiaries if the original owner met the five‑year rule, even though beneficiaries still may face RMD timing rules (including annual RMDs for many) [1] [2] [3]. The IRS delayed final RMD regulations to apply no earlier than the 2026 distribution year, so the precise annual‑RMD mechanics applicable to some beneficiaries were clarified by final guidance that took effect for 2026 [4] [5].
1. How taxes differ: pre‑tax traditional versus after‑tax Roth
Distributions from an inherited traditional IRA are taxed as ordinary income to the beneficiary because the account grew tax‑deferred while the owner was alive; beneficiaries must include taxable withdrawals in their gross income [6] [3]. By contrast, inherited Roth IRAs generally permit tax‑free withdrawals of contributions and typically tax‑free withdrawals of earnings if the Roth satisfied the five‑year aging requirement — meaning, in many cases, beneficiaries face no income tax on distributions from an inherited Roth [1] [2]. Several custodians and advisors make the practical point that “the assets in an Inherited IRA carry over the tax treatment of the original account,” so the underlying tax character does not change on transfer [7].
2. RMDs: owners v. beneficiaries — and Roth exceptions while alive
RMD rules do not apply to Roth IRAs while the original owner is alive, but beneficiaries of Roth IRAs are subject to beneficiary RMD rules after the owner’s death [8] [9]. Traditional IRAs are subject to RMDs for owners (age thresholds moved to 73 for many) and their beneficiaries must follow inherited‑account RMD rules that can require annual distributions or application of the 10‑year rule, depending on beneficiary type and whether the decedent had already started RMDs [10] [11].
3. The post‑SECURE landscape: who can “stretch” and who faces 10 years
SECURE Act changes ended the open‑ended “stretch IRA” for most non‑spouse beneficiaries; most designated beneficiaries who are not eligible designated beneficiaries must empty inherited IRAs within 10 years of the decedent’s death [12] [3]. Eligible designated beneficiaries (spouses, certain disabled or chronically ill beneficiaries, minor children until reaching majority, and those within 10 years younger) may still use life‑expectancy RMDs in some circumstances — a distinction that affects both traditional and Roth inherited IRAs [13] [3].
4. 2026 regulatory timing: why the rules shifted and what changed
The IRS postponed final regulations so the new RMD rules would apply no earlier than the 2026 distribution calendar year; taxpayers are told to use a reasonable, good‑faith interpretation for periods before final applicability [4]. The IRS later issued final guidance clarifying that many beneficiaries will be required to take annual RMDs based on life expectancy beginning in 2026 in certain cases — resolving ambiguity and prompting advisors to update plans for 2026 RMD calculations [5] [14].
5. Practical consequences for beneficiaries: tax planning and timing
A beneficiary of a traditional inherited IRA should expect distributions to increase taxable income in the year taken, so spreading withdrawals or timing them into lower‑income years can materially change tax bills [15] [3]. Inherited Roths offer the tax‑free withdrawal advantage (subject to the five‑year rule for earnings), but beneficiaries must still mind timing rules — including whether annual RMDs are required or whether the 10‑year rule applies — because RMD timing affects estate liquidity and tax planning even if taxes aren’t due [1] [2].
6. Two perspectives: investor caution vs. planning opportunity
Advisors and custodians emphasize caution: treat inherited Roths as tax‑advantaged sheltering and inherited traditional IRAs as taxable income that can push beneficiaries into higher brackets [1] [16]. Estate‑planning attorneys and tax advisers note an opportunity: prudent use of conversions, timing of distributions, and charitable distributions (QCDs when applicable) can reduce taxes across heirs, but those strategies depend on facts and the beneficiary’s status under SECURE/SECURE 2.0 [15] [11].
Limitations and next steps: available sources do not mention specific 2026 dollar‑amount RMD tables or the final text of the 2026 regulations beyond applicability timing; consult the IRS Publication 590‑B and a tax professional for calculations tailored to your situation [6] [4].