Unrelated Business Income Tax (UBIT) often elicits concern and confusion from investors or potential investors. However, many of the concerns are based on misconceptions – or misinformation – regarding the tax. It is important to understand as an investor, an investment sponsor, or a CPA/Tax Professional the implications of UBTI and how it operates within a portfolio.

Since 1974, when IRAs were established under the Employee Retirement Income Security Act of 1974 (ERISA), the IRS and Congress have been updating the rules established around IRAs. With a benefit like tax-free or tax-deferred growth, there also will be a set of rules and regulations that must be followed in order to take advantage of the benefit.

One of those rules is that certain investment strategies trigger the unrelated business income tax (UBIT), even though the funds are invested in a tax-exempt account.

Please browse our website, download our guides and video trainings, and contact us if you would like to speak to a UBIT Professional specialist. We are here to help you understand UBIT, how it may apply to your situation, and are available to assist with your tax preparation needs.