--- title: What is UBTI or UDFI, and how does it affect retirement accounts? description: UBTI or UDFI, retirement accounts --- [Skip to content](https://kb.lightstonedirect.com/knowledge-base-cb/what-is-ubti-or-udfi-and-how-does-it-affect-retirement-accounts#main-content) English Show submenu for translations ![Lightstone Direct Logo](https://kb.lightstonedirect.com/hs-fs/hubfs/Lightstone_Direct_Wordmark_Stacked_Candy_Apple_Red_RGB_RESIZE.png?width=300&height=139&name=Lightstone_Direct_Wordmark_Stacked_Candy_Apple_Red_RGB_RESIZE.png) Open main navigation Close main navigation - English Show submenu for translations - Contact us Contact us How can we help you? - There are no suggestions because the search field is empty. 1. [LSD Main KB | Chatbot](https://kb.lightstonedirect.com/knowledge-base-cb?hsLang=en) 2. [FAQs](https://kb.lightstonedirect.com/knowledge-base-cb/faqs?hsLang=en) # What is UBTI or UDFI, and how does it affect retirement accounts? If a retirement account invests in a deal that uses leverage (such as a mortgage), it may generate Unrelated Debt-Financed Income (UDFI), which is a form of Unrelated Business Taxable Income (UBTI). This can trigger a tax liability inside the IRA, typically reported on IRS Form 990-T. Investors using retirement funds should consult a qualified tax advisor to understand the implications. - [FAQs](https://kb.lightstonedirect.com/knowledge-base-cb/faqs?hsLang=en) - [General](https://kb.lightstonedirect.com/knowledge-base-cb/general?hsLang=en) [![Lightstone Direct Logo](https://kb.lightstonedirect.com/hs-fs/hubfs/Lightstone_Direct_Wordmark_Stacked_Candy_Apple_Red_RGB_RESIZE.png?width=300&height=139&name=Lightstone_Direct_Wordmark_Stacked_Candy_Apple_Red_RGB_RESIZE.png "Lightstone Direct Logo")](http://lightstonedirect.com) [mailto:email@email.com](mailto:email@email.com) Copyright © 2026, Lightstone DIRECT