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ARTICLE · 28 MAY 2020

IRS Proposes Rules On UBIT Changes Affecting Benefit Plan Investors

Groom Law Group, Chartered
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A pension or welfare plan's investment in a private equity or real estate partnership, among other investment funds, may give rise to "unrelated business income tax" ("UBIT").

United StatesEmployment and HR
John Barlow
John Barlow
Richard Matta
Richard Matta
Louis Mazawey
Louis Mazawey
Jim Cole
Jim Cole
Alexander Ryan
Alexander Ryan
David Powell
David Powell
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A pension or welfare plan's investment in a private equity or real estate partnership, among other investment funds, may give rise to "unrelated business income tax" ("UBIT"). In recent years, this issue has arisen frequently as more plans have invested in such vehicles. The Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") made important changes in this area, creating the potential for greater UBIT liabilities for plan investors. IRS Notice 2018-67 (the "Notice"), issued in August 2018, provided helpful guidance that mitigated the impact of these changes for plan investors pending the development of proposed regulations. Treasury and IRS recently published proposed regulations (the "Proposed UBIT Regulations") which build upon the guidance in the Notice. 85 Fed. Reg. 23172 (Apr. 24, 2020). We summarize the Proposed UBIT Regulations below.

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