A Master Limited Partnership, or MLP for short, is a type of business structure that is known to produce excellent rates of return, often as high as eight percent annually. With the MLP business structure, the business leadership and ownership is comprised of a single entity that serves as the general partner, and then a number of entities that fulfill the role of limited partners. In this business structure, the business responsibilities are divided between operations and management, which is the general partner's responsibility, and investing into the business, which falls to the limited partners to manage. While some MLPs are private companies, many are now publicly traded, which means that an investor can purchase a share of an MLP in the same way that you might purchase a share of a mutual fund or a stock share. For this reason, MLPs can often be a viable option for investment using your Roth IRA investment monies.
Even better, since MLPs are a special type of business structure, and how they must generate their income differs from the ways that other types of businesses can earn their income, they receive favorable consideration under current tax laws. With MLPs, a portion of generated income is not considered taxable at any time. So using your Roth IRA monies to invest into MLPs can have lucrative returns if you handle the taxation issues properly. There are some tax concerns that vary from MLP to MLP, however, and certain MLPs are known to have less of these issues than other MLPs. Good MLPs to start investing into from a Roth IRA account include Kinder Morgan (KMR) and Enbridge Energy Partners (EEP), because with each of these MLPs, you receive any distribution in the form of additional shares, and so this is treated just like any stock, as an automatic reinvestment of dividends.