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settlement funds into IRA?
Old 05-28-2018, 09:53 PM   #1
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settlement funds into IRA?

When settlement payments arrive due to an IRA investment, do I deposit that money into the IRA?

I've received a small settlement payment check arising from a class action suit against an investment that had been in my IRA. If I deposit that check into my IRA I would think the broker will send the IRS an IRA contribution form, which will cause tax issues since I'm not otherwise eligible to contribute to the IRA. OTOH if I do not deposit the check into the IRA, accounting-wise it feels like an improper early withdrawal.
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Old 05-28-2018, 10:35 PM   #2
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Interesting question... since it is small I think I would cash it.... worst case you'll owe tax plus 10% but most likely nothing will come of it.
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Old 05-28-2018, 11:09 PM   #3
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Schwab has always accepted these from me as rollovers or transfers. Checks have typically been written to custodian FBO my IRA. https://www.deseretnews.com/article/...-IRA-fund.html

Transfer is better if you swing it. Rollovers have that 1 per 365 day limit.
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