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Return, for the tax year(s) in which the airline payments were received and included in your gross income. You generally must file your amended return by the later of 3 years after the date you filed your original return or within 2 years after the date you paid the tax. For more details on filing Form 1040X to exclude airline payments from gross income, go to IRS.gov/Form1040X. Qualified airline employee. A current or former em- ployee of a commercial airline carrier who was a partici- pant in a qualified defined benefit plan maintained by the carrier which was terminated became subject to restric- tions under section 402(b) of the Pension Protection Act of 2006, or was frozen effective November 1, 2012. These provisions also apply to surviving spouses of qualified air- line employees but don’t apply to covered executives or to surviving spouses of covered executives. Covered executives. A current or former principal exec- utive officer (PEO) or one of the three highest compensa- ted officers (other than the PEO and principal financial of- ficer (PFO). The term “covered executives” generally doesn’t include the PFO. Airline payment. An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. The payment also must be made both: • Under the approval of an order of a federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, or filed on November 29, 2011; • In respect of the qualified airline employee’s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being is- sued), or any other fixed obligation of the carrier to pay a lump-sum amount. Any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can roll over to your traditional IRA. Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer (defined later) and you re- ceived qualified settlement income (defined later), you can contribute all or part of the amount received to an eli- gible retirement plan which includes a traditional IRA. The amount contributed can’t exceed $100,000 (reduced by the amount of qualified settlement income contributed to an eligible retirement plan in prior tax years) or the amount of qualified settlement income received during the tax year. Contributions for the year can be made until the due date for filing your return, not including extensions. Qualified settlement income that you contribute to a tra- ditional IRA will be treated as having been rolled over in a direct trustee-to-trustee transfer within 60 days of the dis- tribution. The amount contributed isn’t included in your income at the time of the contributions and isn’t consid- ered to be investment in the contract. Also, the 1-year waiting period between rollovers doesn’t apply. Qualified taxpayer. You are a qualified taxpayer if you are: • A plaintiff in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D.Alaska); • The beneficiary of the estate of a plaintiff who ac- quired the right to receive qualified settlement income and who is the spouse or immediate relative of that plaintiff. Qualified settlement income. Qualified settlement in- come is any interest and punitive damage awards which are: • Otherwise includible in income; and • Received in connection with the civil action In re Ex- xon Valdez, No. 89-095-CV (HRH) (Consolidated) (D.Alaska) (whether pre- or post-judgment and whether related to a settlement or judgment). Qualified settlement income can be received as periodic payments or as a lump sum. See Miscellaneous Income in Pub. 525, Taxable and Nontaxable Income, for informa- tion on how to report qualified settlement income. Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free. For information about transfers of interests in em- ployer plans, see Distributions under divorce or similar proceedings (alternate payees) under Rollover From Em- ployer's Plan Into an IRA, earlier. Transfer methods. There are two commonly used meth- ods of transferring IRA assets to a spouse or former spouse. The methods are: • Changing the name on the IRA, and • Making a direct transfer of IRA assets. Changing the name on the IRA. If all the assets are to be transferred, you can make the transfer by changing the name on the IRA from your name to the name of your spouse or former spouse. Direct transfer. Under this method, you direct the trustee of the traditional IRA to transfer the affected assets directly to the trustee of a new or existing traditional IRA set up in the name of your spouse or former spouse. If your spouse or former spouse is allowed to keep his or her portion of the IRA assets in your existing IRA, you can direct the trustee to transfer the assets you are per- mitted to keep directly to a new or existing traditional IRA set up in your name. The name on the IRA containing your spouse's or former spouse's portion of the assets would then be changed to show his or her ownership. Page 28 Chapter 1 Traditional IRAs