Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
While MLPs are not subject to any business tax, holding MLPs within an IRA would trigger an unrelated business taxable income, according to the Motley Fool. The UBTI amount will reflect in the Schedule K-1 issued by the MLP. IRA investors who have an MLP within the account will also need to send a Form 990-T to their IRA custodian if they receive more than $1,000 in income from all of their MLP investments. -- Motley Fool
When the paychecks stop coming, minimizing the tax bite becomes even more important for clients, according to The New York Times. There are several strategies that can help, particularly when retiring clients suddenly find themselves in a lower tax bracket. But they are not always obvious. -- The New York Times
Retiring clients who have to take a required minimum distribution from their retirement accounts this year but don't need the money are advised to take the RMD, pay the appropriate tax and re-invest the money in a taxable account, according to USA Today. Returns from the re-invested money in taxable accounts will be subjected to capital gains tax, which is lower compared with regular income tax. -- USA Today
Although investing within tax-sheltered accounts can help limit tax liability, clients could max out these accounts and would be forced to invest in taxable accounts, according to Morningstar. Retirement may adopt any of the model bucket portfolios for tax efficiency, depending on their investing approach: aggressive, moderate or conservative. -- Morningstar