Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
The high yields paid by MLPs is due to the partnership not paying income taxes. Hence, the info is passed onto the shareholder who then pays at his level.

The MLP distributions received in a taxable account are tax free.
The MLP distributions received in a tax sheltered account are fully taxable in a tax when the money is removed from the tax sheltered account. Every dollar removed from an IRA is 100% taxable because it was originally funded with un-taxed money. In addition there is no step-up in value at time of death. After 70 1/2 you have to start taking RMDs (required minimum distributions) And once you start and die your heirs have to continue based on their age and pay taxes on every Dollar. Securities in taxable accounts get stepped up to current value at time of death so there is no tax obligation for the heirs
In an IRA in addition to the above there is also the UBIT problem with MLPs.

b&w
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.