# Inherit a Roth IRA Tax Trap

> Daughter loses $9,600 tax bill by withdrawing Roth IRA earnings too early.
- Title: Inherit a Roth IRA Tax Trap · 24/7 Wall St. | Shortify
- Summary: Daughter loses $9,600 tax bill by withdrawing Roth IRA earnings too early. Daughter paid $9,600 federal tax on $40,000 Roth IRA earnings withdrawn before the…
- Keywords: roth ira, tax, inheritance, federal tax, taxable income, tax bill, five-year clock, tax-free distribution, taxable earnings, 24/7 Wall St.
- Source: 24/7 Wall St. — https://247wallst.com/personal-finance/savings-accounts/2026/11/04/inherit-a-roth-ira-your-father-opened-three-years-ago-and-the-earnings-arent-tax-free-yet-the-five-year-clock-doesnt-restart-for-heirs-but-it-doesnt-stop-either-and-year-10-is-still-the-deadl
- Author: Vilma Rios
- Published: 2026-11-04T14:47:35+00:00
- Read time: 1 min
- Topics: roth ira, tax, inheritance, federal tax, taxable income, tax bill, five-year clock, tax-free distribution, taxable earnings
## Inherited Roth IRA
Daughter inherited father's Roth IRA opened in 2023 with $200,000 conversion.
## Tax-Free Timing Mistake
She withdrew full $240,000 balance in 2026, but $40,000 earnings were taxable.
## Five-Year Clock Rules
Father's five-year clock started in 2023 and runs for 10 years after death.
## Taxable Earnings
The $40,000 earnings were taxed at 24% federal rate, costing $9,600.
## Tax-Free Wait Period
Leaving earnings until January 1, 2028 would have made them tax-free.
## Ten-Year Deadline
Account must be emptied by December 31, 2036, the 10th year after death.
## Steps to Avoid Tax
Check start year, total basis, hold earnings, mark deadline, check spousal status.
## Key Tax Figure
The $9,600 federal tax bill represents the cost of early Roth earnings withdrawal.
## Tax Trap Consequence
Daughter paid $9,600 federal tax on $40,00:00 earnings withdrawn too early.
## Key takeaway

Daughter paid $9,600 federal tax on $40,000 Roth IRA earnings withdrawn before the five-year clock expired.