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Frequently Asked Questions (FAQ's) for investment of Retirement Assets 1. Can I invest my IRA or Pension fund assets in a JVM “D” share investment? Yes. 2. Can I invest my IRA or Pension fund assets in a JVM “A/B” share investment? Yes. 3. Is there any tax risk in investing my retirement assets in these JVM investments? Does this create risk for the tax status of my whole retirement plan? No 4. What is “Unrelated Business Income” (UBI)? It is a tax rule that applies to IRA investments. Simply stated it is taxable income that is not related to the tax-exempt function of the entity. The concept arises when IRA assets are invested in “Debt Financed Property”. In a year when the fund reports taxable income, the IRA would be responsible for paying income tax on its share of income related to the Debt Financed Property at trust tax rates. There is no impact on other investments in the IRA. 5. Should I be concerned about UBI if I invest my IRA or Pension fund assets in JVM “D” shares? No. There is no UBI issue for Pension investments and the UBI rules do not apply to “D” share investments in IRA’s since it is not a “Debt Financed Property” investment. 6. Should I be concerned about UBI if I invest my Pension Fund or IRA assets in JVM “A/B” shares? Generally, if the requirements of section 514(c)(9) of the Internal Revenue Code are met, Pension funds are not subject to UBI on debt financed property. IRA’s would be responsible for paying income tax on its proportionate share of income related to the debt-financed property computed based upon the trust tax rates. 7. Will the “interest” and any capital gains from these JVM investments be paid directly into my IRA/Pension? Yes 7a. Will they accumulate and grow on a tax-deferred basis just like my other investments in that IRA/Pension? Yes, subject to the UBI on IRA’s. Note: A PURCHASE OF ANY INTEREST IN THE FUND MAY OR MAY NOT SATISFY THE VARIOUS REQUIREMENTS AND STANDARDS IMPOSED BY LAW UPON FIDUCIARIES ADMINISTERING RETIREMENT PLANS UNDER THE EMPLOYEE RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"). FOR EXAMPLE, THE FUND MAY NOT SATISFY THE DIVERSIFICATION, PRUDENCE OR SUITABILITY STANDARDS IMPOSED BY ERISA UPON PLAN FIDUCIARIES. IN ADDITION, A PURCHASER OF THE FUND MAY BE SUBJECT TO UNRELATED BUSINESS TAXABLE INCOME RULES UNDER ERISA. EACH PLAN FIDUCIARY MUST DETERMINE THESE MATTERS FOR ITSELF, AS THE FUND IS MAKING NO REPRESENTATION OR WARRANTY AS TO THESE LEGAL MATTERS. |
