Gifting a Roth IRA before death is not something federal law allows in the literal sense — the account itself has to stay in the name of the person who opened it. What you can do is take money out and gift the cash, or hand someone funds to put into their own Roth IRA, staying within the $19,000 per-recipient annual gift tax exclusion for 2026. How much tax you pay on the way out depends on your age, how long the account has been open, and which part of the balance you tap.
Why the Account Itself Can’t Be Transferred
Federal tax law defines a Roth IRA as an individual retirement plan, meaning it belongs to one person and cannot be jointly held or retitled into someone else’s name.1Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs You cannot ask your brokerage to change the owner to a child, grandchild, or friend. The tax-free growth is tied to the person who earned the income and funded the account.
If someone tried to reclassify the account anyway, the IRS would treat it as a distribution to the original owner followed by a contribution by the new person, which creates tax, penalty, and excess contribution problems. To share the money during your lifetime, you have to use one of the indirect routes below. Divorce is the one narrow exception, covered later.
Withdrawing Cash From Your Roth IRA and Gifting It
The most direct method is to take a distribution, receive the cash, and hand it to the recipient. Whether that withdrawal costs you anything depends on which layer of the account you are pulling from.
The Order Withdrawals Come Out
Every Roth IRA distribution is treated as coming out in a fixed order: first from your regular contributions, then from conversion amounts (oldest first), and finally from earnings.2eCFR. 26 CFR 1.408A-6 – Distributions Because your contributions were made with after-tax dollars, you can pull them out at any age, for any reason, with no income tax and no 10 percent early withdrawal penalty.3Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
Say you contributed $80,000 over the years and the account is now worth $130,000. The first $80,000 you withdraw is treated as a return of contributions, tax-free regardless of your age or how long the account has been open. Only after that do withdrawals dip into conversions and then earnings.
When Earnings Come Out Tax-Free
A withdrawal that reaches the earnings layer is fully tax-free only if two conditions are both met: you are at least 59½, and at least five tax years have passed since your first contribution to any Roth IRA.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) That is a qualified distribution, and the whole amount comes out free of federal income tax and penalty.
Pull earnings before hitting both marks and the earnings portion is taxable as ordinary income, potentially with an added 10 percent penalty. Conversions carry their own separate five-year clock, one per conversion; taking converted funds out inside that window can trigger the 10 percent penalty on the portion that was originally taxable.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) For gifting, staying within your contribution layer, or waiting until you qualify, keeps the withdrawal clean.
Funding a Roth IRA in Someone Else’s Name
You can also give cash that the recipient uses to fund their own Roth IRA. The IRS does not care where the deposit money came from, only that the account holder has enough earned income to support the contribution. The IRS uses the example of a grandmother making a contribution to her grandson’s IRA on his behalf, provided he has sufficient taxable compensation.5Internal Revenue Service. Retirement Topics – IRA Contribution Limits This route leaves your own account alone.
2026 Contribution and Income Limits
The 2026 Roth IRA contribution limit is $7,500, or $8,600 if the recipient is 50 or older.6Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The contribution cannot exceed the recipient’s taxable compensation for the year. If your grandchild earned $3,000 from a summer job, only $3,000 can go into their Roth, even if you gifted more.5Internal Revenue Service. Retirement Topics – IRA Contribution Limits
The recipient also has to fall within the Roth IRA income limits. For 2026, the ability to contribute phases out at these modified adjusted gross income levels:6Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Single or head of household: phase-out from $153,000 to $168,000
- Married filing jointly: phase-out from $242,000 to $252,000
- Married filing separately: phase-out from $0 to $10,000
If the recipient’s income is above the top of their range, they cannot contribute to a Roth IRA at all, and your gift needs to go somewhere else. If they deposit more than earned income or the annual limit allows, the IRS imposes a 6 percent excise tax on the excess for every year it stays in the account, so confirm eligibility before you send the money.5Internal Revenue Service. Retirement Topics – IRA Contribution Limits
Spousal and Custodial Accounts
If your spouse has little or no income, you can still fund a Roth IRA in their name, as long as you file jointly and your combined taxable compensation covers both contributions. Each spouse can put in up to the full limit — $7,500 for 2026 — for a household total of $15,000, or $17,200 if both are 50 or older.5Internal Revenue Service. Retirement Topics – IRA Contribution Limits
A custodial Roth IRA works the same way for a minor child or grandchild. An adult opens and manages the account, but the child needs their own earned income from babysitting, lawn mowing, a part-time job, or similar work. The cap is the lesser of $7,500 or the child’s total earnings for the year. When the child reaches the age of majority (typically 18 or 21, depending on the state), they take full control.
Once the money lands in the recipient’s account, you have no ownership stake and no control. They pick the investments, they decide when to withdraw, and the gift is irrevocable.
Gift Tax Rules on the Cash You Hand Over
Whether you gift withdrawn cash or fund someone else’s contribution, the same federal gift tax rules apply. For 2026, you can give up to $19,000 per recipient with no gift tax consequences and no reporting.7Internal Revenue Service. Frequently Asked Questions on Gift Taxes Give more than $19,000 to one person in a calendar year and you file IRS Form 709 for the excess.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Filing does not automatically mean tax is owed; the excess reduces your lifetime estate and gift tax exemption.
The exclusion is per recipient. Five grandchildren, $19,000 each, $95,000 total, no gift tax return required.
Married couples can elect to split gifts, treating each gift as if half came from each spouse. That doubles the annual exclusion to $38,000 per recipient. Both spouses must consent on Form 709, and the election applies to every gift made during the year.9Internal Revenue Service. Instructions for Form 709 (2025) Splitting requires filing Form 709 even if each half falls under $19,000.
The Divorce Exception
Divorce is the only situation in which a Roth IRA can be transferred directly to another person while the owner is alive. Federal law provides that a transfer of your interest in a Roth IRA to a spouse or former spouse under a divorce or separation instrument is not a taxable event.10Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts After the transfer, the account is treated as belonging to the receiving spouse for all tax purposes.
This requires a formal divorce decree or court-approved separation agreement that addresses the retirement assets. The institution then moves the money through a trustee-to-trustee transfer or retitles the account. Because the law treats this as a court-ordered division rather than a voluntary gift, there is no early withdrawal penalty, no income tax, and no gift tax. The exception does not extend to unmarried partners, siblings, or other family members.
Why Waiting to Pass It at Death Often Serves Heirs Better
Because the account itself cannot be handed over during your lifetime, most people who want to pass Roth IRA money to family use a beneficiary designation. When you die, the account becomes an inherited Roth IRA for whoever you named, and the tax-free treatment stays intact in ways a lifetime cash gift cannot preserve.
Withdrawals of contributions from an inherited Roth IRA are tax-free, and most withdrawals of earnings are as well, provided the original owner’s account met the five-year holding requirement.11Internal Revenue Service. Retirement Topics – Beneficiary If the account was less than five years old when you died, earnings taken by the beneficiary may be taxable.
For most non-spouse beneficiaries, including adult children and grandchildren, the SECURE Act requires the inherited Roth IRA to be emptied by the end of the tenth year following the owner’s death.11Internal Revenue Service. Retirement Topics – Beneficiary A surviving spouse has more flexible options, including treating the inherited account as their own. Leaving the money in the Roth IRA rather than withdrawing and gifting cash gives your heirs up to another decade of tax-free growth, which is why many financial planners treat the Roth IRA as one of the last accounts to draw down.