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Category: Finance
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Experience:  Tax professional and business consultant for 35 years.
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Do REITS and MLPs affect my ROTH IRA negatively? What are

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Do REITS and MLP's affect my ROTH IRA negatively? What are the implications? My father has a standard IRA, and I would like to know if there are tax implications for a standard IRA as well.

PDtax :

Hi from Just Answer. to q & A for a couple of questions...

Hi Jake,

I assume you mean the implications for owning MLP and REIT inside the Roth IRA. The only issue I have with that is the special tax treatment and compliance for certain investments.

MLP's can have UBI (unrelated business income). It is taxable, even in a Roth IRA, but the first $1,000 of such income is still tax free. The tax reporting is a surprising PITA, though.

REIT's also can have UBI, most notable from related services to the rental of real estate. for example, a hotel operator would have UBI for things like catering, personal services for guests, and the like.

Both Roth and traditional IRA's have the exposure, both have the same $1,000 floor for reporting, and remain good long term investments for IRA's.

Thanks for asking for me. Please advise if you need anything else, or leave positive feedback to close out your question.

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Customer: replied 4 years ago.



I was curious as to know the earliest an individual can use a 72-T election to access money from a IRA/401K for an emergency or for convenience. I am aware that the distributions are paid out either over 5 years, or the amount of years it takes to get to 59 1/2 (whichever one is higher). Thank you.

I'll be glad to assist, but need you to ask that as a separate question. Thanks.