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Ask the Hammer: What are the RMD Rules for Beneficiaries of a Roth IRA that Holds Rental Property?

Jeffrey Levine of Buckingham Wealth Partners explains the RMD rules for beneficiaries of a Roth IRA that holds an illiquid asset - rental property.

By Jeffrey Levine May 13, 2026

Roth Accounts
Jeffrey Levine CPA/PFS, CFP®, ChFC® — Chief Planning Officer, Focus Wealth Partners
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Key Takeaways

  • Beneficiaries have 10 years to empty inherited Roth IRAs with no RMD requirements in years 1-9, allowing them to distribute illiquid assets like rental property in kind in year 10 rather than forcing a sale
  • For tax-free distributions from an inherited Roth IRA, the combined holding period of the original owner plus the beneficiary must total at least 5 years—death does not waive this requirement
  • Get a professional appraisal of the property when distributing it from the account, as this fair market value becomes the beneficiary's tax basis for future growth and protects against IRS challenges
  • When multiple beneficiaries inherit one illiquid property, they face practical complications (not tax-related) since they cannot sell shares to each other due to prohibited transaction rules—plan ahead to avoid forced early sales

Ask the Hammer: What are the RMD Rules for Beneficiaries of a Roth IRA that Holds Rental Property? Jeffrey Levine of Buckingham Wealth Partners explains the RMD rules for beneficiaries of a Roth IRA that holds an illiquid asset - rental property. Watch more episodes of Ask The Hammer at this link: https://www.finstream.tv/videos/ask-the-hammer/

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