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UBTI in IRAs: Reporting Unrelated Business Taxable Income in MLPs, Self-Directed IRAs, and Qualified Plans

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, August 3, 2023

Recorded event now available

or call 1-800-926-7926

This course will give nonprofit tax professionals and advisers a thorough guide to recognizing and reporting unrelated business taxable income (UBTI) about IRAs, qualified plans, and other retirement accounts. The webinar will focus on the standards and guidelines for determining whether income derived from assets held by a qualified plan is UBTI subject to tax and provide a detailed exploration into calculating UBTI and reporting the resulting unrelated business income tax.

Description

While the default treatment of IRAs and other qualified retirement plans is to defer income tax on any accumulation in asset value until distributions are taken, certain types of income and transactions subject an ordinarily exempt/deferred plan to current income tax. An IRA or other plan that receives UBTI over a specified threshold is required to report the income and pay unrelated business income tax on the UBTI.

The most apparent circumstances where UBTI applies to a qualified plan are in self-directed IRAs owning real estate or closely held business assets, particularly where debt financing is involved. However, assets such as master limited partnerships (MLPs), which are traded on a public exchange, can generate UBTI and result in unforeseen tax filing and payment obligations.

Tax advisers must grasp the complex UBTI rules as they pertain to qualified retirement plans. Failure to recognize and account for UBTI in a tax-deferred plan can lead to a host of adverse tax consequences, including tax, penalties, and disallowed contributions.

Listen as our experienced panel provides practical guidance on the tax consequences of UBTI in qualified retirement plans, offering detailed instructions on identifying UBTI-generating assets and discussing filing and payment requirements arising from UBTI in qualified plans.

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Outline

  1. UBTI generating assets in IRAs and other qualified plans
  2. Self-directed IRA reporting
  3. IRA trusts and other vehicles holding UBTI assets
  4. Identifying and calculating UBTI
  5. Filing Form 990T

Benefits

The panel will discuss these and other important topics:

  • What assets and structures will generate UBTI?
  • How do MLPs held by an IRA impact UBTI reporting and payment requirements?
  • What are the estimated payment rules for qualified plans with unrelated business income tax liabilities?
  • Unrelated debt-financed income rules and treatment of qualified plan assets financed by debt
  • What factors should account holders be especially aware of in cases where the plan holds UBTI-generating assets?

Faculty

Funk, William
William M. Funk
Member
Norris McLaughlin

Mr. Funk focuses his practice on tax law, with extensive experience in tax planning and dispute work. He...  |  Read More

Humphrey, Bill
Bill Humphrey
Co-founder and CFO
New Direction Trust Company

Mr. Humphrey is recognized in the industry as an expert in self directed IRAs, HSAs and other tax-advantaged accounts,...  |  Read More

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