- What is a Master Limited Partnership (MLP)?
An MLP is a publicly traded partnership. The nature of a partnership provides for the "pass through" of income to its partners. This essentially avoids double taxation on profits often paid by corporations, which pay corporate income tax in addition to its shareholders paying taxes on dividends. Individual investors buy ownership interests, or units, in the partnership through a stock exchange similar to purchasing shares of stock in a corporation. Like other publicly traded entities, MMP files quarterly and annual financial statements with the Securities and Exchange Commission (SEC).
- What is the distribution payout?
Since the time of our IPO in Feb. 2001, we have raised our distribution for a total increase of 551%. Our current distribution payout for the quarter ended December 31, 2016 is $.855 per unit, or $3.42 on an annualized basis.
- When is the distribution paid?
We will pay our distributions within 45 days of the end of the quarter. Distributions for the quarter ending December 31, 2016 are paid Feb. 14, 2017 to unitholders of record on Feb. 3, 2017.
- Does Magellan have a DRIP?
We do not have a distribution reinvestment plan. However, if your units are held in a brokerage account, your broker can arrange for your distributions to be automatically reinvested for you.
- What are the tax implications?
Magellan Midstream Partners, L.P. will not pay any federal income tax. Instead, each unitholder will be required to report on his income tax return his share of our income, gains, losses and deductions without regard to whether corresponding cash distributions are received. Our unitholders receive a Schedule K-1 during late February to advise of the income they are responsible for reporting on their individual income tax returns. The Schedule K-1s can also be viewed online.
It is the responsibility of each unitholder to investigate the legal and tax consequences under the law of pertinent states and localities of his investment in Magellan Midstream Partners, L.P. We suggest that you consult with your own tax advisor.
- Can MLPs be held in an IRA?
Although tax-exempt accounts, such as an IRA, may invest in MLP units, virtually all of the taxable income generated by a publicly traded partnership is considered to be unrelated business taxable income (UBTI). As such, this income is currently taxable not only to IRAs but also Keoghs and other qualified retirement plans to the extent it exceeds a $1,000 annual threshold. Please consult with your financial advisor.
If you have any other questions, please contact Investor Relations or call (877) 934-6571.