stock litigation settlement from IRA

[Granny11]

I have a settlement for stock previously held in my IRA. No 1099 issued. Stock was sold in the IRA in 2014. How and where would I report this settlement.
I also have settlement for part of the amount reported as a loss on a Schedule D, also in 2014.  Does this become misc income or should it be on Schedule D for this year and how do  I determine how to classify it as to long or short term gain? Same as the stock originally sold in 2014?

Thank you. 

[hbl3973]

Granny11,

From my understanding of your post, some good news and some not so good news:

First, the 2014  sale of stock held within your IRA was not supposed to be reported as a capital gain or loss on your 2014 tax return.  It was just a lowering of your IRA value.  However, as the 3 year lookback statute of limitations has passed, you won't need to file an amended return.

For the same reasons, the 2020 litigation recovery is technically a distribution from your IRA unless you deposited those funds into any current IRA within the 60 day rollover period.  Either way, you would enter the amount under the 1099-R section of income in TurboTax rather than as a capital gain under Schedule D.  If you redeposited it, then you would so indicate and no tax would be due.  If not, you would pay ordinary income tax rates on the amount and, if you were less than 59 1/2 last year, you would also pay an additional 10% early distributions penalty.

[turbotaxxwang]

I am brand new here and I don't know where to post my question so I ask a similar question here:

I received my old company's 401k class settlement payment for the company's mishandling of its 401k funds.  I didn't know its potential tax consequence so I cashed the payment check.  When doing my Turbo Tax now I am told I should pay early withdrawal penalty.  I actually didn't withdraw anything.  It was a settlement that I now realize I should put back into my 401k.  

In Turbo Tax there are not many options that fit my situation.  What shall I do?

Thank you for any advice!

[AmyC]

You will have to pay the penalty for early withdrawal as it should have been put into your 401k. See About Form 5329, Additional Taxes on Qualified Plans | IRS for possible exceptions.