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Only earned income can be contributed to a Roth IRA.
The two transactions are completely separate. The money you received may or may not be taxable, depending on what it represents. The state probably won’t send you a 1099, so you would be on the honor system to figure out what the income is and whether or not to pay taxes on it. (For example, if this was a return of premiums because the life insurance company went out of business, and you had previously paid the premiums with after-tax money, then the return of premiums is not taxable. If this represents some kind of investment proceeds, it might be partly or all taxable. You would have to analyze what the source of the payment was.)
then, if you want to make contributions to a Roth IRA you must have earned income and meet all the other general eligibility rules. Your annual Roth contribution limit is $6000, or possibly $7000 depending on your age.
even if you were to sign this check over directly to the IRA trustee, for tax and accounting purposes, it is treated as two separate transactions each governed by their own rules.
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