Unrelated Taxable Income and Pensions

Plan fiduciaries, plan advisers and investment fund managers may not be aware that the Tax Cuts and Jobs Act of 2017, enacted a year ago December, made major changes to the Internal Revenue Code (IRC) provisions affecting unrelated business taxable income (UBTI). The IRS issued IRS Notice 2018-67 this past August 20, to provide some guidance on how to interpret these changes to the IRC and how to apply them until the Treasury Department issues proposed regulations. Those regulations could have a substantial impact on how tax-qualified retirement plan trusts and voluntary employee benefit associations (VEBAs) invest in funds that generate UBTI and how such funds are structured and managed.

In the March/April 2019 PLANADVISER article linked below, Groom principal David Kaleda discusses how the Tax Cuts and Jobs Act raises the tax on funds generating UBTI.