Form 990 T

[52626]

401(k) participant directed plan allows participants to have a Self Directed Brokerage Account with the custodian.

Question;

Does the Trust file the 990 T for any Unrealed business taxable income (UBTI) resulting from all self directed brokerage accounts. For example ther are 75 SDBA, and 5 have UBTI, are the accounts aggregated and one 990T is filed? If the taxation is in excess of $1,000 who pays tax? the Plan or the participants whose accounts were reported?

Never worked with UBTI before, and the particiapnts/administrator are getting letters from the platform about these investments and potential taxation.

thanks

[Mike Preston]

One 990T, but check with an accountant to be sure. The "trust" pays the tax. I would hope that the plan and trust has language saying that the tax brought about by a specific SDBA would be paid from the SDBA, or is silent and therefore up to the discretion of the Trustee. But it is possible the plan is mis-drafted and calls for something else. If it provides guidance at all, you have to follow it.

I don't think "the taxation is in excess of $1,000" is a correct statement. I think you have to file the form if the UBTI exceeds $1,000. But again, check the instructions to the form.