Schedule K-1 for Energy Transfer LP in my Roth IRA - Do I need to file this with my personal tax return?

You don't need to file the K-1 with your personal tax return when the investment is held in a Roth IRA. The whole point of retirement accounts like Roth IRAs is that they serve as a separate tax entity from your personal finances. When you receive a K-1 for an investment held in a Roth IRA, it's actually the IRA custodian (Vanguard in your case) that's responsible for any required tax filings related to that investment, not you personally. The fact that the K-1 was addressed to you rather than "Vanguard FBO your name" is just an administrative oversight on Energy Transfer's part. The income shown on that K-1 ($425 ordinary business income and other items) doesn't need to be reported on your personal return because those earnings occurred within the tax-advantaged Roth environment. That's one of the benefits of investing in a Roth - all qualified earnings grow tax-free.

After dealing with the exact same headache last year with pipeline MLPs in my retirement account, I discovered taxr.ai (https://taxr.ai) and it was seriously a gamechanger. I uploaded my K-1 from Energy Transfer and some other partnerships, and it instantly told me which ones needed reporting and which ones didn't based on the account they were held in. The tool confirmed what others are saying - K-1 investments in Roth IRAs don't need to be reported on your personal return. But what really helped was understanding why - the system explained how retirement accounts work with partnership investments and pointed out exactly which boxes on the K-1 I could ignore since they were in my Roth. The best part was that it saved me from paying my accountant an extra $75 per K-1 form he would have processed for me unnecessarily!

Just wanted to follow up - I tried taxr.ai with my Energy Transfer K-1 that I also hold in my IRA and wow, it really was helpful! I uploaded the K-1 PDF and it immediately identified that it was held in my retirement account and explained I don't need to report it. What I found most useful was that it broke down which specific parts of the K-1 would normally be taxable but are exempt because they're in the IRA. Now I finally understand why UBTI matters for certain investments in IRAs (though fortunately Energy Transfer didn't generate any for me). The system even provided a reference document explaining the tax treatment that I can keep with my records in case of questions. Definitely going to use this for all my investment docs next year!

If you're still confused about this K-1 situation or have other IRS questions, you might want to try calling the IRS directly for clarification. I know that sounds like a nightmare - I spent literally 4+ hours on hold last month trying to resolve a similar investment reporting issue. Then I found this service called Claimyr (https://claimyr.com) that gets you through to an actual IRS agent usually in under 15 minutes instead of waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I used it when I had questions about MLP investments in my retirement accounts last year, and they connected me to an IRS tax law specialist who confirmed that K-1s for investments held in Roth IRAs don't need to be reported on personal returns. The agent explained the exact rules and I felt much more confident afterward than just taking advice from random internet people (no offense to anyone here!

I need to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to give it a try since I had an unresolved issue with my tax transcript that I'd been putting off dealing with for months because I dreaded the IRS hold time. To my genuine surprise, I was connected to an IRS representative in about 15 minutes. The agent was able to resolve my transcript issue and I also asked about the K-1 situation with retirement accounts while I had them on the phone. They confirmed exactly what everyone here said - K-1s for investments held in Roth IRAs don't need to be reported on personal returns because the income is already tax-advantaged within the retirement account. Honestly, being able to get a definitive answer directly from the IRS gave me peace of mind that I wasn't screwing up my taxes. Wish I hadn't been so dismissive initially.

One thing nobody's mentioned that might be important - while you don't need to report the K-1 income on your personal return, you should check if your Energy Transfer investment is generating any Unrelated Business Taxable Income (UBTI) over $1,000 in your Roth. If it is, the IRA itself may need to file a Form 990-T and pay taxes on that portion. Most custodians like Vanguard will handle this filing if necessary, but it's worth checking with them specifically about UBTI for MLPs in retirement accounts. Some MLPs generate significant UBTI which can create tax liabilities even inside tax-advantaged accounts.

Umm just want to point out that everyone saying to ignore the K-1 is only partially right. While you don't report the income on your personal return, you DO need to keep track of your basis in the MLP units, even in a Roth IRA. The partnership distributions frequently return capital that reduce your basis, and if you ever sell the Energy Transfer units, you'll need that basis info to calculate if there's any excess income that could potentially trigger UBTI even in a Roth. If the basis goes negative (which happens with MLPs all the time), that has tax implications too. So don't just throw the K-1 away - keep it with your investment records!

I went through this exact same situation last year with my Energy Transfer units in my Roth IRA! The confusion is totally understandable - getting a K-1 addressed to you personally when the investment is in a retirement account really throws you off. As others have confirmed, you don't need to report this on your personal tax return. The K-1 income stays within the tax-advantaged Roth environment. I made the mistake of initially entering mine into TurboTax and then had to go back and remove it after consulting with my tax preparer. One practical tip: I called Energy Transfer's investor relations line (you can find it on their website) and asked them to update the registration to show "Vanguard FBO [Your Name] Roth IRA" for future K-1 mailings. It took about 10 minutes and now I get them properly addressed, which eliminates the confusion each year. Also, definitely keep that K-1 with your investment records as others mentioned - not for immediate tax purposes, but for your own documentation. The $425 in ordinary income you mentioned is pretty typical for Energy Transfer and shouldn't cause any UBTI concerns. You can breathe easy and focus on the rest of your tax return!

I just wanted to add my experience as someone who's dealt with this exact scenario for several years now. I hold Energy Transfer LP units in both my Roth IRA and a taxable brokerage account, so I get two K-1s each year - one for each account. The difference in how you handle them is night and day. For the units in my taxable account, I absolutely have to report all the K-1 income, track basis adjustments, deal with depreciation recapture, etc. It's honestly a nightmare that requires professional help. But for the units in my Roth IRA? I literally just file the K-1 away with my investment records and forget about it. No reporting, no basis tracking complications, no tax calculations. That's the beauty of the Roth structure. The key thing that helped me understand this was realizing that the Roth IRA is essentially a separate tax entity. Anything that happens inside it stays inside it from a tax perspective. The only time you'd ever have tax implications is if the IRA itself generated over $1,000 in UBTI (which would require the custodian to file Form 990-T), but as others have mentioned, that's pretty rare with typical MLP investments. So Diego, you can definitely breathe easy and just ignore that K-1 for your personal tax filing. Save yourself the stress and complexity!

I've been following this thread with great interest since I'm in a similar situation with MLP investments in my retirement accounts. One thing I'd like to add that hasn't been mentioned yet is the importance of understanding how your custodian handles these K-1 investments from an operational standpoint. I hold several MLP positions across different retirement accounts with various custodians, and I've noticed that not all of them are equally equipped to handle the administrative complexity of partnership investments. Some custodians are fantastic at tracking UBTI, handling any required 990-T filings, and providing clear year-end summaries, while others seem to struggle with the nuances. For those considering MLP investments in retirement accounts, I'd recommend asking your custodian specifically about their experience with partnership investments before purchasing. Questions like: How do they track UBTI across all your MLP holdings? Do they have systems in place to automatically file Form 990-T if needed? How do they handle the timing of distributions versus K-1 reporting? Vanguard, which Diego mentioned, generally has good systems for this, but it's always worth confirming their specific procedures. The peace of mind knowing your custodian can properly handle these investments is worth the upfront conversation. That said, Diego, you're absolutely in the clear for your personal tax filing - just wanted to share this perspective for anyone else considering similar investments!

I just wanted to thank everyone who contributed to this thread - as someone who's been lurking in this community for a while but never posted before, this discussion has been incredibly educational! Diego, I hope you're feeling much more confident about your situation now. The consensus from multiple experienced members is crystal clear: you can safely ignore that K-1 for your personal tax filing since the Energy Transfer investment is held in your Roth IRA. What I found most valuable was learning about all the nuances beyond just the basic answer - things like UBTI thresholds, the importance of custodian capabilities, updating registration information with the partnership, and keeping records even though you don't report the income. These are the kinds of practical details you don't typically find in generic tax advice articles. This thread is a perfect example of why community knowledge-sharing is so powerful. Between Anastasia's clear explanations, Carmen's real-world experience, Sophia's comparison of taxable vs. retirement account treatment, and Keisha's custodian operational insights, Diego got far better guidance than he would have from a single source. I'm bookmarking this thread for future reference since I'm considering some MLP investments myself and now know exactly what questions to ask my custodian first!

As someone who works in tax preparation and has dealt with this exact scenario many times, I want to reinforce what others have said - you absolutely do NOT need to report this K-1 on your personal tax return since the Energy Transfer investment is held in your Roth IRA. The confusion is completely understandable because receiving a K-1 addressed to you personally feels like it should be reported, but the key is WHERE the investment is held. Since it's in your Roth IRA, all the income, gains, and distributions stay within that tax-advantaged account. I see this mistake frequently during tax season - clients bring in K-1s from retirement account investments thinking they need to report them. What I always tell them is to think of their Roth IRA as a separate "tax bucket" - whatever happens inside that bucket doesn't affect their personal tax return. Your TurboTax software might even try to import the K-1 if you scan documents, so be careful not to accidentally include it. The $425 in ordinary income and other amounts shown on your K-1 are already properly sheltered within your Roth structure. Keep the K-1 for your records, but you can confidently file your personal return without including any information from it. One less headache during tax season!

As a tax professional who specializes in retirement account investments, I want to echo what everyone has said and add one important clarification: the reason you don't report K-1 income from investments held in Roth IRAs is because the IRA itself is the actual owner of the investment for tax purposes, not you personally. When you "own" Energy Transfer LP units in your Roth, you're actually the beneficial owner, but Vanguard (as custodian) is the legal owner holding those units "for the benefit of" (FBO) your account. This is why the K-1 should technically be addressed to the custodian, not to you directly. This legal structure is what creates the tax protection - since the IRA entity owns the investment, any income flows to the IRA entity, not to you as an individual. That's why there's no personal tax reporting required. The same principle applies to ALL investments in retirement accounts - stocks, bonds, REITs, MLPs, etc. The income they generate stays within the retirement account's tax umbrella. The only exception would be if UBTI exceeds $1,000, which would require the IRA itself (not you) to file Form 990-T. Your instinct to ignore the K-1 for personal tax purposes is absolutely correct. Just file it with your investment records and move on!

As someone who's been investing in MLPs within retirement accounts for over a decade, I wanted to add a few practical points that might help Diego and others in similar situations. First, Energy Transfer LP is actually one of the "cleaner" MLPs when it comes to UBTI generation - they typically produce minimal amounts compared to some other partnerships, so your $85 UBTI that you mentioned earlier is pretty typical and nothing to worry about. Second, I'd recommend creating a simple spreadsheet to track your MLP K-1s each year, even though you don't report them. Include columns for the partnership name, account type (Roth vs Traditional IRA vs taxable), total income amounts, and UBTI. This makes it easy to monitor if you're approaching any thresholds and gives you a clear record if you ever need to reference historical data. Finally, if you decide to add more MLP positions to your Roth in the future, consider spreading them across different partnerships rather than concentrating in one. This diversifies your UBTI risk - if one partnership has an unusually high UBTI year, you're less likely to hit the $1,000 threshold that would require Form 990-T filing. But for your current situation with just the Energy Transfer position, you're in great shape. File away that K-1 and enjoy the tax-free growth in your Roth!

As a newcomer to this community, I just wanted to say how incredibly helpful this entire discussion has been! I've been holding some MLP investments in my own retirement accounts and had similar confusion about the K-1 treatment. What really stands out to me is how this thread evolved from Diego's straightforward question into such a comprehensive resource covering everything from basic tax treatment to operational considerations with custodians, UBTI thresholds, and even portfolio diversification strategies. The consensus is crystal clear - K-1 income from investments held in Roth IRAs doesn't need to be reported on personal tax returns because the income stays within the tax-advantaged retirement account structure. But the additional insights about proper registration, recordkeeping, and custodian capabilities have been equally valuable. This is exactly the kind of collaborative knowledge-sharing that makes online communities so powerful. Diego asked one question and got expert-level guidance that will help not just him, but anyone else facing similar situations with partnership investments in retirement accounts. I'm definitely bookmarking this thread as a reference and will be implementing some of the practical suggestions like the UBTI tracking spreadsheet that StormChaser mentioned. Thanks to everyone who contributed their expertise and real-world experience!