Claim settlement ? ? ?

A few years ago I held some shares in Royal Ahold, a Netherlands-based company which at that time owned Giant supermarkets in the USA.

I'm not entirely clear what happened, but there was a near-collapse -- during the Enron and Worldcom scandals.

At some point I was invited to join a class action, which I did, while thinking I'd be wasting my time. Lo and behold, today I got a check for $431.

Now comes the tax question: These shares were held in my IRA account, but the settlement payment was made directly to me. As far as I can tell nothing went through my IRA custodian broker.

So how should this settlement be reported on my return for 2007?

I would assume it would be reported as an IRA withdrawal, except that the IRA custodian seems to have no record and reported nothing.

I should add, because it was in an IRA account, I never claimed any loss on the shares.

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Reply to
Ray
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The payment was drafted incorrectly. Return it and have it reissued to your IRA. It then gets deposited in your IRA as earnings.

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

Contact the settlement agent, return the check, and have it reissued to your IRA. It should be deposited there. If you cash the check, not only will you owe tax on the settlement, you will probably owe a 10% penalty. Your state may also assess a penalty (in addition to any tax due). Ira Smilovitz

Reply to
Ira Smilovitz

The proper way to have handled this was to file claim papers using the IRA name.

At this point, you should try to convince he IRA custodian to accept the check as a settlement of claim. He will either say no way, or will accept it and then should code it as a dividend not as a new contribution.

You could also cash it for your personal use but that would make it an IRA distributon subject to a 10% early distribution penalty if appropriate.

-- ArtKamlet at a o l dot c o m Columbus OH K2PZH

Reply to
Arthur Kamlet

"Ray" wrote in

Have you asked Ahold? They still maintain a website,

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even with an investor relations link under contacts. AHONY.PK shares are today at US$14.55, although in 199 they were ~$40 (and the dollar has devalued, so in Euros they lost much more). Ahold still owns Albert Heyn, Giant, Peapod, Stop & Shop. Yes, there was an enormous brouhaha, because they expanded too fast, but Ahold survived somewhat.

-- Best regards Han email address is invalid

Reply to
Han

Thanks to you and others who gave similar advice.

Actually, I'm already in the withdrawal period of my IRA, and I can easily absorb this additional withdrawal without any penalty or any consequence other than to pay the tax on the $431. Seems to me the simplest way would be to go ahead and report it as an IRA withdrawal, even though it won't be reported on my 1099R forms. But it might confuse the IRS.

Reply to
Ray

I have not seen my check yet. But I expect it will be made out to me. In my case, the original holding was in a Roth IRA, with a custodian who I no longer use. So I am assuming, from what has been written here, that for me it would be a qualified withdrawal, not subject to any taxes or penalties. Is that correct, in your opinion?

--ron

Reply to
Ron Rosenfeld

Yes

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

In that case, can't hurt to see if you could convince the distributor to reissue a 1099R that I could see. Not that they're likely to do so, but... Otherwise, just report it as you say and have the explanation if asked...I guess for that amount I'd be sure to make any RMD (if required) satisfy that requirement independent of this just to be on the safe side.

Reply to
dpb

Would it be possible/permissible to consider it a withdrawal and redeposit it as a rollover? Seth

Reply to
Seth

Great catch!

I see no reason why it wouldn't work, unless it creates problems with the once in 12 month limitation on rollovers. Much easier than trying to get the check reissued.

Reply to
Phil Marti

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