Can You Convert an Inherited IRA to a Roth IRA?

You can convert an inherited IRA to a Roth IRA only if you are the surviving spouse of the person who died. Non-spouse beneficiaries — children, siblings, friends, grandchildren — cannot convert an inherited traditional IRA to a Roth at all. There is one narrow workaround: if a non-spouse beneficiary inherits a workplace plan such as a 401(k) or 403(b) instead of an IRA, they can move that balance directly into an inherited Roth IRA. Whichever path applies, the entire pre-tax amount converted becomes ordinary income in the year of the conversion, so the decision comes down to whether future tax-free growth is worth the tax bill today.

How a Surviving Spouse Converts

A surviving spouse who is the sole beneficiary of a traditional IRA has three choices: treat the IRA as their own, roll it into their own IRA, or stay a beneficiary of the inherited account.¹ Only the first two open the door to a Roth conversion. Once the spouse designates themselves as the account owner or rolls the money into an existing IRA, the inherited IRA rules drop away and the account is treated like any other traditional IRA they’ve always owned.²

From there the mechanics are ordinary. The spouse can convert any amount, in one year or over several. The converted balance is added to that year’s ordinary income and taxed at whatever marginal rate it reaches. After conversion, the Roth follows standard Roth rules: no lifetime required minimum distributions for the spouse, tax-free qualified withdrawals, and the ability to name new beneficiaries.

One footnote for spouses with other traditional IRAs holding after-tax (nondeductible) contributions: once the inherited IRA is rolled into your own, it joins the pool the pro-rata rule works from. The IRS treats all your traditional, SEP, and SIMPLE IRAs as one account for calculating how much of any conversion is taxable, so you cannot isolate the pre-tax dollars.

The Early Withdrawal Trap for Younger Spouses

Treating an inherited IRA as your own has a cost that catches younger surviving spouses off guard. Once the account is yours, you’re subject to the same early withdrawal rules as any owner. Distributions before age 59½ trigger a 10% additional tax on top of ordinary income tax.³

The 10% penalty does not apply to distributions taken by a beneficiary on account of the original owner’s death.³ That exception vanishes the moment the spouse treats the account as their own, because they are no longer a beneficiary. A spouse of 52 who might need the money before 59½ should consider leaving the account in beneficiary status until then, and only converting once the penalty is off the table.

Why Non-Spouse Beneficiaries Cannot Convert

Children, grandchildren, siblings, friends, and every other non-spouse beneficiary must keep an inherited IRA titled in the name of the deceased owner for their benefit. They cannot roll it into their own IRA, contribute to it, or convert it to a Roth.¹ The same restriction applies to inherited SEP and SIMPLE IRAs.²

The only Roth-building option available to a non-spouse IRA beneficiary is indirect: take distributions from the inherited traditional IRA, pay the ordinary income tax, and invest what’s left in a regular Roth IRA using their own earned income. That approach doesn’t move the whole inherited balance into a Roth; it just recycles the after-tax portion through the normal contribution limits.

The Exception for Inherited 401(k)s and 403(b)s

Non-spouse beneficiaries do get one true conversion route, but only when what they inherited is a workplace plan rather than an IRA. A designated beneficiary of a 401(k), 403(b), or governmental 457(b) plan can do a direct trustee-to-trustee transfer of the inherited balance into an inherited Roth IRA.⁴ The money has to move directly between custodians; the beneficiary cannot handle it in between.

The full amount transferred is taxable as ordinary income in the year of the rollover. The resulting inherited Roth IRA stays on the same distribution timeline as the original inherited account — moving to a Roth does not buy more time. What it does buy is tax-free growth inside the account for however many years remain, and tax-free distributions when the money comes out, assuming the five-year rule is met.

The Tax Bill on a Conversion

Every dollar converted from a pre-tax retirement account to a Roth is taxed as ordinary income in the year of the conversion.⁵ The converted amount stacks on top of wages, investment income, and Social Security, and is taxed at whatever marginal rate the total reaches. For 2026, the federal brackets for single filers are:

10% up to $12,400
12% from $12,401 to $50,400
22% from $50,401 to $105,700
24% from $105,701 to $201,775
32% from $201,776 to $256,225
35% from $256,226 to $640,600
37% over $640,600

For married couples filing jointly, the 37% bracket begins at $768,700.⁶ A surviving spouse who converts a $500,000 inherited IRA on top of $80,000 of wages hits total income of $580,000, pushing significant chunks into the 35% bracket. Spreading the same conversion across three or four years can keep most of it in the 24% bracket and save tens of thousands in federal tax.

Pay the tax bill from funds outside the IRA. Pulling extra from the account to cover the tax makes that withdrawal itself taxable, which erodes the amount actually landing in the Roth.

Medicare Premiums and the 3.8% Investment Tax

A large conversion has knock-on costs beyond income tax. Medicare Part B and Part D premiums include income-related monthly adjustment amounts (IRMAA) that apply two years after a high-income year, based on that year’s return. For 2026, the first IRMAA tier begins at modified adjusted gross income above $109,000 for single filers and $218,000 for joint filers, and the surcharges rise through multiple tiers up to $500,000 single or $750,000 joint.⁷ A spouse already on Medicare who converts a large inherited balance in a single year can add thousands to their annual premiums.

The 3.8% net investment income tax is the other side effect. Roth conversion income is not itself investment income, but it inflates adjusted gross income, which can push existing dividends, capital gains, and rental income above the NIIT thresholds of $200,000 single and $250,000 joint. Those thresholds are not adjusted for inflation.⁸ A taxpayer who normally stays under $200,000 but converts $300,000 of inherited IRA money can suddenly owe 3.8% on investment income that has never been subject to NIIT before.

The 5-Year Rule on the New Roth

Not every dollar coming out of the new Roth is automatically tax-free. Contributions and converted principal always come out tax-free, but earnings need the five-year clock satisfied.²

For a spouse’s conversion, the clock starts on January 1 of the year the conversion occurs. Convert in 2026 and the period runs through 2030; withdrawals of earnings before January 1, 2031, can be taxable. For a non-spouse who rolls an inherited workplace plan into an inherited Roth IRA, the clock starts on January 1 of the rollover year. Since the inherited Roth must be emptied within 10 years, the five-year threshold is normally met well before the final distribution.

The 10% early withdrawal penalty on conversions is waived for distributions made to a beneficiary on account of the account owner’s death, so a non-spouse beneficiary who does the workplace-plan rollover and later takes money out won’t face the 10% penalty regardless of age.³ Earnings can still be taxed if the five-year clock isn’t yet satisfied.

Conversions Cannot Be Undone

Before 2018, a taxpayer could reverse a Roth conversion through recharacterization if the account dropped in value or the tax bill turned out larger than planned. The Tax Cuts and Jobs Act permanently eliminated that option. Conversions from a traditional, SEP, or SIMPLE IRA to a Roth cannot be recharacterized, and neither can rollovers from employer plans into a Roth IRA.⁵

The decision is genuinely irreversible. If the account drops 30% the year after conversion, the tax has already been paid on the higher pre-drop value with no way to claw it back. That’s a strong reason to stagger conversions instead of converting a large balance all at once — smaller annual moves limit exposure to a bad market year.

How the 10-Year Rule Affects the Math for Workplace Plans

A non-spouse beneficiary weighing the inherited-workplace-plan-to-Roth transfer needs to remember that moving to a Roth does not change the distribution deadline. Most non-spouse designated beneficiaries have to empty the inherited account by December 31 of the tenth year after the year the original owner died.² Ten years of tax-free growth is meaningful, but it is not a lifetime stretch, and the tax bill on the conversion is due up front.

The math is most favorable when the beneficiary is in a low income year, when the account is likely to grow substantially over the remaining years before the 10-year deadline, and when the beneficiary can pay the conversion tax from outside funds. It is least favorable when the beneficiary is already in a high bracket, close to the 10-year deadline, or would have to tap the account itself to cover the tax. The conversion cannot be undone if any of those assumptions turn out to be wrong.

1
Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
2
Internal Revenue Service. Retirement Topics – Beneficiary
3
Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions from Traditional and Roth IRAs
4
Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
5
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs
6
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
7
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
8
Internal Revenue Service. Topic No. 559, Net Investment Income Tax