"Convert" windfall to 403b or just shove it in a taxable account?

[laughing_paddler]

Hi folks,

Quick question here- I have some (plenty) room for 2015 contributions in a newly available (to me) 403b and some windfall cash money approximately equal to a couple of pay periods sitting around. Should I:

1) Live off the windfall and increase 403b contribution for two pay periods, then decrease back to previous contribution.

2) Take the sum and chuck it into my taxable account. I'd be doing some allocation gymnastics across some funds, but would keep bonds outta the taxable.

Just wondering what forum consensus on this might be- it's not yet clear how easy/complicated the contribution changes are going to be.

[MDM]

Live off the windfall and increase 403b contribution [to either a traditional or Roth option, as you plan allows and your finances dictate] for two pay periods, then decrease back to previous contribution.

Unless there is some reason you would rather pay more tax?  There could be a reason, but there should be a reason to do other than maximize the 403b.

[forummm]

Why not just increase your 403b for the rest of the year (not to take all your paycheck--just some more of it) and then try to keep up that level of contribution next year too?

[Proud Foot]

How does this windfall affect your tax situation? And are you already contributing enough to the 403b to max your employer match, if you have one?

1) If it will be included in taxable income I would max a Traditional IRA and then increase the 403b contributions so the additional amount equals the remaining amount of the windfall.

2) If it is not taxable I would figure what your current marginal rate is and what it would take to get it down to the 10% level. If that amount is greater than the windfall I would do #1 above. If it is less I would put the excess in a Roth IRA, the amount needed in a Traditional IRA to reach the annual IRA max, and then increase 403b contributions for the remaining.

3) If you're already in the 10% I would max the Roth IRA and then put the rest in a taxable account.

[laughing_paddler]

How does this windfall affect your tax situation? And are you already contributing enough to the 403b to max your employer match, if you have one?

1) If it will be included in taxable income I would max a Traditional IRA and then increase the 403b contributions so the additional amount equals the remaining amount of the windfall.

2) If it is not taxable I would figure what your current marginal rate is and what it would take to get it down to the 10% level. If that amount is greater than the windfall I would do #1 above. If it is less I would put the excess in a Roth IRA, the amount needed in a Traditional IRA to reach the annual IRA max, and then increase 403b contributions for the remaining.

3) If you're already in the 10% I would max the Roth IRA and then put the rest in a taxable account.

Thanks to MDMs case study spreadsheet I have a decent idea of the tax situation this year and we will be firmly in the 15% bracket (MFJ). The money is not income for 2015 (some is returned 2014 tax after an IRA recharacterization). We will both be maxing out the IRAs and since I just recently got access to a 403b at work, I'll be hard pressed to get all the way to maxing it before the end of the year... thanks for the details PF.

Why not just increase your 403b for the rest of the year (not to take all your paycheck--just some more of it) and then try to keep up that level of contribution next year too?

that would certainly be a great goal to shoot for, forummm-