If you are taking distributions from your IRA ,there should no be any problem with the distributions from an MLP . Just as long as your IRA distributions equal or include within them the dollar amount of the MLP dividend.
MLP are better income producers at this time than bonds and along with telecoms are a good source for income out of an IRA , while not disturbing the stock itself. Ideally, a distributing IRA's should not require one to sell stock to get a distribution .A structure that does this can be achieved with conservative investments at the present time in gas pipelines and electric utilities and telecoms.
dontowenothin wrote "If you are taking distributions from your IRA, there should not be any problem with the distributions from an MLP. Just as long as your IRA distributions equal or include within them the dollar amount of the MLP dividend."
I have yet to see any mention that withdrawals from the IRA would have any effect on the taxation of UBTIs. If dontowenothin has a source for this claim that IRA withdrawals has the effect of escaping UBTI taxation, then dontowenothin should provide a link to his information, just as I have provided a link to my sources of information.
Dontowenothin - I hope you are right - because this would be great news. But there are logical reasons for me to believe you are wrong - besides the fact that the primers are in disagreement with what you believe to be the case. Your statement would imply that the taxation of MLPs is based on their distributions. But outside an IRA, the taxes are NOT based on the distributions. So - using logical [and using logic is a dangerous thing to do when it comes to taxes] - why would the taxation of MLPs inside an IRA be based on the distributions?
I agree that the MLP tax structure might incur more taxes, within an IRA or 401K ( if one were to reinvest the distributions).If one receives #1K or less distributions , then these distributions have no other tax consequences than normal IRA distributions. The deferred gain of an MLP may preswent some additional tax problems because of return on capital within the distribution . That is a very touchy thing because it woukld involve double taxation. The return on capital in the lump distribution has already been treated as ordinary income.the trick not to get too many shares of any one MLP in an Ira account to trigger the over $1k distribution.