Fair Fund Settlements
Can monies received as an SEC Fair Fund settlement from a mutual fund held within a former employer plan be rolled to an IRA? i.e., can the check recieved be signed payable to the IRA custodian and treated as a rollover? Is the Fair Fund settlement considered a taxable distribution in first place?
Permalink Submitted by Alan Spross on Tue, 2009-09-29 19:11
Yes, you can roll over the settlement to an IRA as long as it emanated from a qualified retirement plan or IRA. Some of these settlements may not even generate an 1099R, but if so, just report it as a rollover on line 16 if it came from an employer plan. If you don’t, the distribution will be taxable and possibly subject to early withdrawal.
Some IRA custodians (eg Schwab), will just have you endorse them “For deposit only, A/C # xxxxxxx” – showing the IRA account number to receive the rollover.