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!