SteelPath offers Mutual Funds and a Collective Trust vehicle designed for institutions seeking to avoid Unrelated Business Taxable Income (UBTI). The SteelPath open-end mutual funds have no leverage, UBTI or K-1′s, providing a platform to access MLP investments that provide high cash flows and attractive total return potential. The Collective Trust strategy is designed exclusively for qualified retirement plans and also avoids UBTI.
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*Though an investment in the SteelPath MLP Mutual Funds does not generate UBTI, direct ownership of MLP units may. Unrelated Business Taxable Income (UBTI) creates Unrelated Business Income Tax (UBIT). Under the UBIT rules, tax-exempt institutions and retirement accounts must pay tax on income from a business that is not related to their exempt purpose. Because of the pass-through nature of an MLP, or any partnership, unit holders are treated by the tax code as if they are directly earning the MLP‘s income. Therefore, the tax is owed on the retirement account‘s share of the MLP‘s taxable business income as reported on the K-1. Though there is a deduction that covers the first $1,000 of unrelated business income from all sources; after that, the retirement account will owe tax.