Limited partnerships in IRA’s
I kind of remember I was told at one time that Limited Partnerships (like real estate and oil & gas) were NOT allowed in IRA’s. I don’t know why they wouldn’t be and who would find out about it if they were. I have had LP’s in regular taxable accounts and the tax paperwork is a pain. In IRA’s, it would be no problem. Can someone that knows, tell me if LP’s ARE allowed to be in IRA’s?
Thanks
Rusty Nelson
Permalink Submitted by Alan - IRA critic on Tue, 2022-02-08 15:44
They are allowed in IRAs, but they often kick out UBTI (unrelated business taxable income) with their distributions. If UBTI for the IRA exceeds 1000, the IRA must file Form 990 T and pay the UBIT directly from the IRA itself as well as the cost to file the return. Many large brokers will file the return for you and deduct the fee from the IRA. Oil and gas MLPs are well known for generating UBTI. It may be worthwhile to attempt to limit the number of units purchased so that UBTI remains under 1000.