diff --git a/CHANGELOG.md b/CHANGELOG.md
index b749df6c4..175bd0d02 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,6 +11,8 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixes
 
+- program: account for fee pool when settling positive pnl ([#687](https://github.com/drift-labs/protocol-v2/pull/687))
+
 ### Breaking
 
 ## [2.42.0] - 2023-10-26
diff --git a/programs/drift/src/controller/pnl.rs b/programs/drift/src/controller/pnl.rs
index fed6f85f8..e39bdaea6 100644
--- a/programs/drift/src/controller/pnl.rs
+++ b/programs/drift/src/controller/pnl.rs
@@ -109,11 +109,23 @@ pub fn settle_pnl(
         perp_market.pnl_pool.scaled_balance,
         spot_market,
         perp_market.pnl_pool.balance_type(),
+    )?;
+
+    let fraction_of_fee_pool_token_amount = get_token_amount(
+        perp_market.amm.fee_pool.scaled_balance,
+        spot_market,
+        perp_market.amm.fee_pool.balance_type(),
     )?
-    .cast()?;
+    .safe_div(5)?;
+
+    // add a buffer from fee pool for pnl pool balance
+    let pnl_tokens_available: i128 = pnl_pool_token_amount
+        .safe_add(fraction_of_fee_pool_token_amount)?
+        .cast()?;
+
     let net_user_pnl = calculate_net_user_pnl(&perp_market.amm, oracle_price)?;
-    let max_pnl_pool_excess = if net_user_pnl < pnl_pool_token_amount {
-        pnl_pool_token_amount.safe_sub(net_user_pnl.max(0))?
+    let max_pnl_pool_excess = if net_user_pnl < pnl_tokens_available {
+        pnl_tokens_available.safe_sub(net_user_pnl.max(0))?
     } else {
         0
     };