Settlement from 403B Plan

[Uncle Sam]

A retired schoolteacher received one of those Class Action settlements ($ 115) from a mutual fund that was held in her 403B plan.
Where does this get reported - on line 21 or on Schedule D?

[Jesse]

Was it reported on a 1099R?

I had one last year and if memory serves correct it is treated as a distribution from the retirement plan. Therefore if 59 1/2 code 7 on 1099R, reported as pension income, if under age 59 1/2 code 1 they are subject to the 10% penalty unless they put the monies into a retirement account w/in the 60 day period.

[Uncle Sam]

Settlement from 403B Plan

There was no 1099 of any kind issued.
It was just a cover letter with all the boiler plate disclosure information - class action -some facts, etc. etc.
But the letter was addressed to the client, or successors, etc identifying 403B plan.
If no official 1099 - should I ignore?

[Jesse]

Personally, before I would ignore I would put on line 21.

Google the name and see if you come up with anything

"XXXXXX" Class Action settlement

[bgiez]

settlement check

Most of these checks come with a stub or paperwork that directs the recipient to a website that explains how the settlement amount was calculated and how to report it. If it was issued for a retirement account and the recipient cashed the check and is 59 1/2 +, it goes on line 21 as ordinary income. If they are under 59 1/2 and it it for a based on a retirement account, one can only hope that the recipient read the info that came with the check or contacted you before they did anything with the check, and then deposited into their retirement account as directed. If it is not from a retirement account, and the account it is based on is closed, it usually goes on line 21. For most of my clients, these checks have been less that $30 each, although I do have one client who gets two or three of these checks every year, and they are over a couple hundred dollars each. In most cases the fund or account the settlement was for has been closed or sold.