I received a Schedule K-1 for an investment in an IRA account. Should a Schedule K-1 been issued for an investment in an IRA account?

[1597980]

Thank you very much!  Will do.

[sherry052169]

How about a schedule K-1 issued to my S corp DB plan? do I need to report that K1 under my business tax return? Thank you

[SusanY1]

No, you won't report the K-1 issued to your defined benefit plan since the investments inside of that plan are tax-deferred.  

@sherry052169 

[sherry052169]

Thank you, that's what I thought.

This is exactly the same concept as IRA K1 toward Personal return Vs. DB Plan K1 toward Business Return.

[sherry052169]

I read an article today via fastercapital.com/content/Retirement-Accounts, which was totally opposite of what you're previously saying --

"Investments in individual Retirement accounts (IRAs) can be a great way to save for retirement. However, understanding the rules and regulations surrounding these accounts can be confusing. One aspect that can be particularly tricky is Schedule K-1 reporting. This is a tax form that reports the income, deductions, and credits of a partnership or limited liability company (LLC). When an IRA invests in a partnership or LLC, the IRA owner will receive a Schedule K-1 that they must report on their tax return. "

Do I misunderstand something here? Thank you

[AnnetteB6]

The key to knowing whether a K-1 should be reported on a personal return is whether the K-1 has been issued in the Social Security number of the individual or the Federal ID number of the IRA account.  Unless it is issued to the individual, it is not reported on the personal tax return.  

@sherry052169 

[sherry052169]

I was talking about a K-1 issued from a partnership to S corp's Define Benefit Pension Plan, using S Corp's TIN#

earlier April, S Corp received 2023 K-1 for DB Plan which was not correct. The partnership then revised it, and made 2022 K-1 as final since DB Plan didn't hold any of that investment. Now that we had DB Plan's 2022 K1 in hand in 2024, just wondering if this needs to be filed by amending 2022 company tax return. 

[dmertz]

"When an IRA invests in a partnership or LLC, the IRA owner will receive a Schedule K-1 that they must report on their tax return."

This is completely wrong.  Nothing about the activities within the IRA are ever reportable on an individual's tax return.

If the Schedule K-1 (Form 1065) reports an amount with code V in box 20, the IRA might have to file a tax return (Form 990-T) and pay Unrelated Business Income Tax.  The payment of this tax by the IRA reduces the value of the IRA.

[sherry052169]

Again, the K1 we're talking about here is issued to S Corp's retirement account, applying to S Corp's TIN#, not the individual's SS#

Part II Information about the Partner

.............

I1 What Type of Entity is this partner?  IRA/SEP/KEoqh

[PatriciaV]

The same logic applies to Schedule K-1 issued to an S-Corp EIN, as dmertz explained previously. Only if the K-1 reports UBTI would the pension plan (not the S-Corp) need to file Form 990-T. Check with the plan administrator to confirm they have prepared this form, if needed.

@sherry052169 

[skirch2]

My broker gave the IRS  $20k from my IRA the filing was incorrect by my broker. Try getting the money back from the IRS or even get the broker to admit wrongdoing!

[thaiguyinla]

Replying to an earlier question about how to find what your UBTI value is on a K-1 form:

Each K-1 for a particular investment like an MLP has a designated box (#20, Code V, even though it's not clearly labeled as such) that shows your share of the reporting entity's UBTI for that year (assuming it has UBTI). You don't have to calculate it yourself by looking at distribution amounts or anything else. Just check the amount in Box 20V to see whether you're below or above the threshold $1000 figure.

By the way, as I understand it, the tax-exempt allowance is $1000 per year for ALL UBTI within a particular IRA, and NOT $1,000 of UBTI for each individual K-1 holding that a person might have in their IRA, if they have more than one such investment. So if you have more than one K-1 with UBTI in a particular IRA, you'd need to add those totals together for a given tax year to see where you stand.