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Inheritance Question: Investing a Lump Sum

Q: I have recently received $50,000 in the sale of my father’s home. I am trying to decide whether it is best to max out my 403(b) with the school district or place it in an after-tax account. I currently have a Roth IRA and I am maxing out that account. I also put $700 per month in my 403(b). I am four years away from retirement at age 60, will have TRS pension, and due to my current deductions I believe I am in a lower tax bracket now than I will be in retirement. I had planned to fully fund the 403(b) and use the additional money from my father’s estate to supplement my income. Would it be better to invest it in an after-tax account?

A: Generally, we recommend contributing to your retirement plan up to the match and then funding a Roth IRA if your income level allows. Any additional savings can be applied to your retirement plan until you meet the maximum amount. If you are already maxing out both of these options your best bet would be to fund a taxable/brokerage account. You might also consider paying down any debt you may carry.


 

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