IRA Update

Congress is unlikely to waive required minimum distributions for 2022. 

Rep. Warren Davidson (R-OH) introduced a bill in the House in July that would waive 2022 RMDs from 401(k)s, traditional IRAs and the like. This bill doesn’t have cosponsors, and there isn’t much bipartisan support for it. RMDs were waived for 2020 soon after the coronavirus pandemic started. But they resumed in 2021, and barring something unexpected, are required this year.

IRA owners and IRA investments in MLPs.

Master limited partnerships issue Schedule K-1s to their owners (including IRAs), reporting the owner’s share of ordinary business income or loss. For IRAs, this income is generally considered unrelated business taxable income, and the IRA may owe tax. If UBTI from all of an IRA’s investments exceeds $1,000, then the excess is taxed at a rate of up to 37%. The IRA, not the individual owner, uses Form 990-T to report and compute this tax, which is paid from available assets within that IRA. Most of the big IRA custodians will handle the preparation and filing of the 990-T.