Rink V CREF

Last fall I asked about how to handle a check from the settlement of the Rink v CREF class action suit. Following the advice from here, I rolled the entire amount of the check into an IRA account, since the suit concerned entirely money that was in my IRA account (and the new IRA trustee was fine with this when I explained the situation).

Now I have received a 1099-INT from Rink V CREF for about 1/5 of the total check amount. [Note that I did not receive a 1099-R, or any other form, for the remainder of the settlement amount].

In researching this on-line, I was (only) able to find a query on 'JustAsk.com' from a person in the identical situation, and the answer, from a 'tax expert' was as follows:

"In particular that is your interest income reported on the form 1099-INT - is paid NOT from your annuity and doesn't not qualify for rollover. It is not clear how the remaining amount is reported. Please be aware that ONLY the money reported on form 1099R are classified as distribution and might be eligible for rollover to the IRA. Even if the settlement is for violated their fiduciary and other duties when it retained investment gains on Plaintiffs? retirement funds - the settlement is NOT paid out of your retirement account. If you had earned income - your contribution into IRA might be allowed - but as a new contribution - not as a rollover. You still need to report your interest income and other settlement amount on your tax return. And if you qualify - you may deduct your IRA contribution."

IOW, this 'expert' thinks I have to declare the amount on the 1099-INT as income, and pay taxes on it, and doesn't even think the reminder can be rolled over into the IRA (and, somehow, becomes tax-free income, as there is no 1099 of an kind on the remainder).

If it makes any difference, I received the check in late October, and therefore had to roll it over to the IRA within 60 days - i.e. by late December (which I did), but did not receive the 1099-INT form until late January. Therefore, I could not have known that part of the original check was to be considered interest, nor the amount of that interest,when the rollover was timely accomplished.

My questions:

1. Do you experts agree with the above opinion on the treatment of money from this class action settlement?

2. If so, since I had no earned income in 2012, do I have to get the entire amount back from my current IRA, and how do I do that?

3. If you do not agree, how do I handle the 1099-INT form on my 1040?

There must be thousands of people facing this questions on this class action settlement!

v CREF class action suit.Â Following the advice from here, I rolled the entire amount of the check into an IRA account, since the suit concerned entirely money that was in my IRA account (and the new IRA trustee was fine with this when I explained the situation).

check amount. [Note that I did not receive a 1099-R, or any other form, for the remainder of the settlement amount].

'JustAsk.com' from a person in the identical situation, and the answer, from a 'tax expert' was as follows:

as a new contribution - not as a rollover.

your tax return.

income, and pay taxes on it, and doesn't even think the reminder can be rolled over into the IRA (and, somehow, becomes tax-free income, as there is no 1099 of an kind on the remainder).

therefore had to roll it over to the IRA within 60 days - i.e. by late December (which I did), but did not receive the 1099-INT form until late January. Therefore, I could not have known that part of the original check was to be considered interest, nor the amount of that interest,when the rollover was timely accomplished.

from this class action settlement?

No I don't. The interest income was paid on IRA funds that were not available to you due to the actions of the trustee. The income belongs to the IRA and should have been deposited into the IRA to avoid taxation.

amount back from my current IRA, and how do I do that?

Use the Schedule B instructions for handling income you receive as a nominee. Name the IRA as the nominee. See page 2 of the following document for the procedure.

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The only issue left is whether it makes any sense to actually issue the

1099 to the IRA. I don't think it is necessary. Should you ever get a letter from the IRS adjusting your tax due to the understatement, just respond with the explanation and a document showing that the funds were deposited into the IRA.