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Level 7

How to record IRA Mutual Fund settlement check

I received a check from a Mutual Settlement Fund that was pursuant from an order by the SEC.

The mutual fund is held in an IRA Rollover account. The check is for only $10.00.

Do I enter this any where and if so which form do I need?

Do I have to put it back into the Fund?

Can I cash it without a penalty?

Break down of check.

Fee Component:  8.21

Forgone Appreciation Component: 1.56

Interest Component:  0.23

1 Best answer

Accepted Solutions
Level 20

How to record IRA Mutual Fund settlement check

Cash it and enjoy ... 

You can report it as other income on Form 1040 line 21. Here's how to enter it in TurboTax.

·         Click the Federal Taxes tab ( Personal in the Home & Business version)

·         Click Wages & Income. (Personal income in the H & B version)

·         Click "I'll choose what I work on."

·         On the screen "Your 2016 Income Summary," scroll all the way down to the last section, "Less Common Income."

·         Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."

·         On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."

·         The next screen asks, "Did you receive any other taxable income." Click Yes.

·         On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.

·         On the next screen click Done.

The income will be reported on Form 1040 line 21 with the description that you entered.


View solution in original post

5 Replies
Level 20

How to record IRA Mutual Fund settlement check

Cash it and enjoy ... 

You can report it as other income on Form 1040 line 21. Here's how to enter it in TurboTax.

·         Click the Federal Taxes tab ( Personal in the Home & Business version)

·         Click Wages & Income. (Personal income in the H & B version)

·         Click "I'll choose what I work on."

·         On the screen "Your 2016 Income Summary," scroll all the way down to the last section, "Less Common Income."

·         Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."

·         On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."

·         The next screen asks, "Did you receive any other taxable income." Click Yes.

·         On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.

·         On the next screen click Done.

The income will be reported on Form 1040 line 21 with the description that you entered.


View solution in original post

Level 20

How to record IRA Mutual Fund settlement check

If the fund is held in the IRA then the check should have been made out to your IRA and not to you if the IRA owned the fund.  You should give it to your IRA custodian to be deposited in the IRA.  It would not be a new contribution.  Handled the same as a interest or capital gain within the IRA so nothing needs to be reported if deposited into the IRA account.
Level 7

How to record IRA Mutual Fund settlement check

OK. Thanks

As I said it is a fund that is held in my IRA Rollover.

The check is made out like this.
Pay  My Name
       Brokerage Firm Co Inc Cust

If that makes a difference.
Level 20

How to record IRA Mutual Fund settlement check

Ok ... if the check is made out to the IRA account and you must deposit it to that account then it is not reported at all.
Level 7

How to record IRA Mutual Fund settlement check

Thanks.
I will just cash it and not report since there is no mention of the IRA account.