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Magellan Midstream Partners LP Message Board

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  • dontowenothin dontowenothin Dec 16, 2009 1:41 PM Flag

    Is MMP Suitable for Individual Investor's 401k?

    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.

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    • 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 previously given links to the MLP primers [if that link is needed again - see http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_E/threadview?m=tm&bn=6201&tid=8493&mid=8493&tof=6&frt=2]. The primers come from legit sources - Wachovia, Allerian Capital [the makers of the AMZ index], Merrill Lynch, and Raymond James. Every single primer mentions that fact that MLPs in IRA produce UBTIs - and UBTI over $1,000 triggers a tax on the total amount of your UBTI - and it is not dependent on whether money is kept in the IRA or withdrawn.

      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?

 
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