I inherited a $1.5M Roth IRA. I have some debt, but also want a home. What are the tax rules so I make the best of this?

I inherited a $1.5M Roth IRA. I have some debt, but also want a home. What are the tax rules so I make the best of this? Many Americans work hard their entire lives aiming to build a seven-figure retirement nest egg. But what happens if you’re lucky enough to inherit one? Do the rules change? Imagine 25-year-old Candace, who just lost a favorite uncle at 70. He had no children of his own and left behind a Roth IRA worth $1.5 million to her. She's not sure what to do — she has some debt, but also wants to buy a house and maybe take a bucket-list trip to Italy. Must Read - Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how - Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP - Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast With such a big windfall, it's important to make sure you understand the rules that apply and how taxes might impact the total amount. Rules for inherited Roth IRAs Before Candace spends a dime, she needs to understand how the IRS treats inherited retirement accounts because the rules vary depending on the relationship you have with the deceased. Since Candace is her uncle's niece, she's considered a non-spouse beneficiary. Under the SECURE Act, passed in 2020, most non-spouse beneficiaries are required to fully withdraw the inherited account within 10 years of the original owner's death (1). There are no mandatory annual withdrawals during that window, but the account must be emptied by the end of year 10. The good news for Candace is Roth IRA withdrawals will generally be tax-free, as long as the account was at least five years old at the time of her uncle's death. That's a significant advantage over inheriting a traditional IRA, where every dollar withdrawn is taxed as ordinary income. Withdrawals also won’t be subject to the 10% early withdrawal penalty. That said, the 10-year clock creates some pressure. If Candace does nothing and waits until year 10 to withdraw everything, she'll receive a giant lump sum — tax-free in her case, but a massive financial event regardless. Spreading withdrawals across the 10 years can give her more control and flexibility. It's also worth noting that inherited Roth IRA funds can't be rolled over into her own existing Roth IRA. The accounts must stay separate. However, she can withdraw the money and use it to fund her own accounts. It's worth noting, however, the tax liability for inherited retirement accounts can get complicated. Consult with a tax professional for advice on your specific situation.