UBTI in IRAs
L1: UBTI in IRAs
I hold limited partnerships in IRAs which generate K-1s.
I understand that my broker will file a 990-T on my behalf if the gross amount
of UBTI generated exceeds 1,000.
Is this 1,000 limit across all IRA’s held at one brokerage or by each individual IRA with a unique account number?
I hold the same MLP in two different IRA accounts at the same brokerage but only get 1 K-1.
Should I be getting a K-1 for each IRA?
If taxes are paid from an IRA account which I also take 72t distributions from, will the tax paid bust the plan?
2019-04-02 19:33, By: rad, IP: [18.104.22.168]
L2: UBTI in IRAs
Yes, it is a limit of $ 1,000 total across all IRAs.
It doesn’t matter what distributions from a SEPP 72-T are for, or to whom they are made on your behalf. If your total annual amount is $ 25,000, you can take all $ 25,000 and then send in your own estimated tax payment, or you can take $ 20,000 and have the broker withhold $ 5,000 ans remit it to the IRS, or some to a state if IRA distributions are taxable in your state. (IRA distributions are taxable in PA only if taken before 59 1/2, and then only after you recover your contributions.
I would expect to get a separate K-1 for each account, but check the calculation based upon the number of shares or ownership in each account.
2019-04-02 20:16, By: dlzallestaxes, IP: [22.214.171.124]
L3: UBTI in IRAs
To be clear, is the $1,000 limit the gross total?
For example if one MLP has positive UBTI and another has negative UBTI, these would offset correct?
2019-04-02 21:12, By: rad, IP: [126.96.36.199]
L4: UBTI in IRAs
Yes, but I don’t remember seeing any negative UBTI, but I guess it’s possible.
2019-04-03 00:00, By: dlzallestaxes, IP: [188.8.131.52]
L5: UBTI in IRAs
Note that the 990 T filed for your IRA to report UBTI over 1000 will generate a tax due that also must be paid directly from the IRA, and the cost to complete the return will also be deducted from the IRA. However, these expenses are NOT reported on Form 1099R as an IRA distribution, so will not affect your 72t plan.
2019-04-03 02:56, By: Alan S, IP: [184.108.40.206]