Security Litigation Settlement Proceeds Deposited Into IRA Account

emhamiltn

I receieved a litigation settlement check related to the New York State Teachers’ Retirement System v. General Motors Company class action litigation settlement.

- The shares were owned inside my Traditional IRA.
- I no longer own the GM shares, as they were sold back in 2014.
- The settlement check was made out to the custodian (Fidelity for my benefit) and forwarded to Fidelity for deposit into my IRA as a "restorative payment".

How should the deposit be treated in Quicken ???



(I temporarily recorded it as per the attached image)

q_lurker

What you have done is perfectly reasonable in my opinion.

The only question I see is categorization.  You have it set to refer to the account of the IRA which essentially leaves the source "unidentified".  The amount comes out of thin air just like an opening deposit transaction.  That works. 

In my case for such settlements, I have chosen a category "Other Income:Non-taxable."  I suspect the taxation on such settlements varies on a case-by-case basis.  My treatment (in contrast to yours) will show as income on related reports.  Yours may show on various reports depending on your choice for the report handling of transfers.  Personal choice.  

q_lurker

What you have done is perfectly reasonable in my opinion.

The only question I see is categorization.  You have it set to refer to the account of the IRA which essentially leaves the source "unidentified".  The amount comes out of thin air just like an opening deposit transaction.  That works. 

In my case for such settlements, I have chosen a category "Other Income:Non-taxable."  I suspect the taxation on such settlements varies on a case-by-case basis.  My treatment (in contrast to yours) will show as income on related reports.  Yours may show on various reports depending on your choice for the report handling of transfers.  Personal choice.  

emhamiltn

Thx q_lurker, I was hoping you'd chime in on this I agree regarding the categorization being a personal choice. I elected to treat it in this manner because it truly isn't an income item (the cost basis of the disposed shares would have been less) and certainly not a tax reportable item as it simply made me whole (restorative payment) and occurred in a traditional IRA (where cost basis is generally ignored for tax purposes)