How to Convert an Inherited IRA to a Roth

The first IRA accounts were available in 1974, when the IRA code was written. Roth accounts became available much later. Roth IRAs let you withdraw the contributions and investment gains tax-free at retirement. The only way to convert an inherited IRA to a Roth is if your spouse passes away and you inherit an IRA from her.

Step 1

Designate yourself as the owner of the IRA inherited from your spouse. You can contact the trustee to change your name to the owner of record, or you can roll it into your own IRA.

Step 2

Notify the trustee of the IRA that you want to convert the IRA to a Roth. The trustee will complete any necessary paperwork to document the conversion and ensure that all future withdrawals from the account are tax-free.

Step 3

Complete Form 8606, Nondeductible IRAs, to document the conversion and calculate the taxable amount of the conversion. Complete only part 1 of the form if you are converting part of the account. For any Roth conversions, complete part 2. The amount from line 18 of the Form 8606 is the taxable amount of the Roth conversion.

Step 4

File your income tax return for the year and pay the taxes on the converted amount. Carry the taxable amount from line 18 of Form 8606 over to Form 1040, line 15b, or Form 1040A, line 11b. You will add the amount into your taxable income from here, and calculate the taxes during completion of the form.