Master Limited Partnership UBTI tax treatment in Solo401K

[Teresa Wang]

I want to buy a Master Limited Partnership (MLP) stock such as (NYSE: EPD) in my Solo401k account. My understanding is that MLP distributions are reporte on K-1s and may be considered UBTI.

Am I shielded from having to pay taxes now on this type of UBTI since the asset is
held in my Solo401K account?

Teresa Wang

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[Mark Nolan]

@AmandaHan

Amanda Han Managing Director from Fullerton, CA

8 Posts
12 Votes

Top SubjectSolo 401k,Solo 401k Contributions

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@shamilton

Steven Hamilton Enrolled Agents (EAs) from Grayslake, IL

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20 Votes

Top SubjectSolo 401k,Private Company/Private Placements

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Can one of you please shed some light on this great question?

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net

[Steven Hamilton]

You will definitely have to take it into consideration. It is not the distributions themselves that are subject to taxation it is the net profit or loss of the MLP and it’s underlying activities.

If there is more than $1,000 of net profit of UBTI activities you will need to file a 990-T

Steven Hamilton

Hamilton Tax and Accounting

Contact

(224) 381 2660 hamiltontax.com

[Amanda Han]

Hi Teresa! Agree with Steve that it depends on what type of underlying income the MLP will flow-through to your Solo k. One suggestion may be to get a sample k1 from them so you can see what to expect.

Amanda Han

Managing Director

Contact

(714) 916-5400 www.KeystoneCPA.com

[Teresa Wang]

Thank you Mark, Steven and Amanda for the information. This is so helpful and will save me a lot of grieve in long run.

Teresa Wang

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