* A Reserve money fund freezes distributions

* Investors still cannot recover $85.5 million

* Board to evaluate whether more money should be paid out

By Jonathan Stempel

NEW YORK, Nov 12 (Reuters) - More than a year after the implosion of the Reserve Primary Fund triggered near panic in the $3.3 trillion money market mutual fund industry, a smaller fund once run by the same company has halted distributions.

The board of trustees for the Reserve Yield Plus fund on Thursday said the fund will not for now distribute its $85.5 million of remaining assets, citing potential costs including litigation. It said it has already distributed more than $1 billion, or in excess of 90 percent, of its assets.

Reserve Primary, which once held $62 billion of assets, imploded when Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research) went bankrupt on Sept. 15, 2008, forcing it to write off $785 million of Lehman holdings.

The next day, Reserve Primary said it was worth 97 cents per share, becoming the first major money fund to fell below $1 per share, or "break the buck."

Its collapse was a big factor in a seizing of credit markets that prompted the government to shore up money funds, which buy corporate and government debt and are used by millions of workers in retirement plans.