I am 34 and received a $60k inheritance recently. I have no debt and no wish to buy a property with this money, can I put it in super and is that a good idea?
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Thank you for your question and I am sorry to hear of your loss.
The short answer is yes, you could put the $60,000 into superannuation.
Generally speaking, you have two options to contributing the $60,000 into super.
Option one is making a combination of concessional contribution (up to $30,000 including any other concessional contribution such as your employer contribution) and non-concessional contribution in the current financial year
The type of concessional contribution depends on your work arrangement. If you are employed, you could potentially salary sacrifice part of your salary into super and use the cash inheritance to replace the “sacrificed” salary. If you are self-employed person trading with your own ABN, you may be able to claim a tax deduction on the concessional contribution which may reduce your overall tax payable.
The remaining fund after the above can be contributed into superannuation as non-concessional contribution (after tax).
Option two is simply making non concessional contribution $60,000 into your superannuation. Note that you need to check that your non concessional contribution will not be over your cap in the last three financial year totaling $540,000 since 2014/2015 Financial Year.
The main concern with putting money into super at your age is the preservation rule. Generally speaking, you will not be able to access the fund in superannuation until you reach your preservation age which is currently 60 i.e. 26 years. Are you comfortable with this?
Some other common considerations in relation to an inheritance:
- What are your short term objectives and long term goals and how is this inheritance going to help you achieve them?
- What are your options with the inheritance including PROS and CONS of each option? For example, investing in your own name, investing in superannuation, investing in yourself e.g. further study.
- Do you have adequate cash reserve or insurance to cover any unforeseeable events without this fund?
I would recommend that you speak to a good financial planner. He / She will be able to analyse your positon and explain to you the PROS and CONS of all the available options.
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