Lawsuit settlement proceeds into an IRA
Client owned some U.S. West shares in an IRA … Now, years later, they’re sending him some settlement $$ from a class-action shareholder suit.
Is there any danger of the IRS deeming this to be a(n excess) contribution ? If so, how do I avoid this ?
Thanks so much,
PJI
Permalink Submitted by Bruce Steiner on Fri, 2009-02-13 22:49
If you want absolute certainly, get a private letter ruling.
Permalink Submitted by mk foss on Fri, 2009-02-13 22:59
If the check is made out to the IRA or indicates that the IRA was the owner of the shares, the IRA custodian may accept it as a rollover. This would have to occur within 60 days of the date on the check.
Not every custodian will accept a rollover of these proceeds so Bruce is correct that the PLR provides certainty.