Lawsuit Settlement IRA
I have been looking at the question regarding a settlement in a lawsuit regarding mismanagement of funds for an IRA. Now that the IRA owner has received a check made payable only to him, can he follow the rollover rules and deposit back into his IRA?
On page 240 of the 2014 Instant IRA Success workbook, there are several private letter ruling noted, but were all issued in 2004. Is this option still viable? Saying that nothing has changed recently in the area.
Thank you,
Alan
Permalink Submitted by Alan - IRA critic on Sat, 2015-12-12 17:12
IRS letter rulings allowing restoractive payments continued after 2004. Generally, the IRA custodian will just have the IRA owner endorse the check over for deposit to the IRA. The check should NOT be deposited in the owners checking account and a new check written. If the person still maintains the same IRA account that the settlement applied to, it is best to place the funds back in the same IRA. If account is closed, then another IRA is OK. There may be complications if punitive damages were part of the settlement. The deposit of the settlement should be treated as a non reportable transfer by the receving custodian.
Permalink Submitted by Bruce Steiner on Sat, 2015-12-12 23:32
See my articles on this subject in Trusts & Estates Wealth Watch News in August 2007, http://kkwc.com/wp-content/uploads/2015/04/TE_Wealth_Watch_News_August_2007.pdf#toolbar=1&navpanes=0&nameddest=self&page=1&view=FitH,0&zoom=80,0,0, and in Trusts & Estates in June 2011, http://kkwc.com/wp-content/uploads/2015/04/uf_Bruce_Steiner_Feature__Restorative_Payments.pdf#toolbar=1&navpanes=0&nameddest=self&page=1&view=FitH,0&zoom=80,0,0.