67.5 Qualified Settlement Funds

(a) Definition

A registry account may be a designated or qualified settlement fund only if: 

(1) there has been a settlement agreement in the case;

(2) the court has entered an order establishing or approving a deposit into the registry as a settlement fund; and

(3) the liability resolved by the settlement agreement is of a kind described in 26 U.S.C. § 468B or 26 C.F.R. § 1.468B-1(c). 

The depositing party shall elect to have the funds treated as a designated or qualified settlement fund and must identify any such deposit made with the court.

(b) Procedure for Establishment of Fund

When the court establishes or approves a designated or qualified settlement fund that will be held in the registry, the court will also designate or approve a person outside the court as the administrator responsible for obtaining the employer identification number for the fund, filing all fiduciary tax returns, and paying any tax.  The court will either approve the person that the settlement agreement names as administrator or designate the party that deposited the funds into court.

(c) Interest Income

The depository institution shall report all interest income on a designated or qualified settlement fund for the current year, using the fund's own employer identification number.  This includes any interest income assessed by the court as a registry fund fee.  The tax identification numbers of the parties and the court shall not be used with respect to a designated or qualified settlement fund.

(d) Withdrawal

As with any disbursement from a registry account, a court order is required for any withdrawal of funds from a registry account to pay or withhold tax pursuant to 28 U.S.C. § 2042.

(e) Assistance to Administrator

The court will make available to the administrator any pertinent information needed for fulfillment of fiduciary duties.