I recently received an inheritance, how much of it can I put into superannuation as a lump sum?

There are quite a few matters to consider when deciding whether to contribute inheritance money into superannuation.

Currently, legislation allows members to contribute up to $100,000 during the 2016/2017  financial year in post-tax contributions (non-concessional contributions) if your total superannuation balance at 30 June of the previous financial year is less than $1.6 million. If it’s at or above this amount you will be unable to make any further post-tax contributions without tax implications. Refer to our How super is taxed document for more information.

If you’re under age 65 you may be able to bring forward an additional two years of post-tax contributions, up to a maximum of $300,000. If you have already triggered the bring forward period in the previous two years (2015/16 or 2016/17) but have not used up your full amount, transitional arrangements will apply. If you need some more information, check out these examples. As always it’s best to check this before making any contribution to superannuation.

Before making the decision to contribute the inheritance to superannuation, it’s also worth determining the reason why you want to do so: tax incentives, strong investment options or low administration costs could be some. You may also want to consider salary sacrifice arrangements, however, it’s beneficial to review your entire financial situation before taking any action. An analysis of your cash flow, including access to these funds once contributed to superannuation, plus future financial goals should be considered first. Once the funds are in super, you will need to meet a condition of release before you can access them again.

If you decide to invest some of the inheritance outside of super, then tax, implications, access to funds and the cost of administering those investments should be considered before deciding on how to invest these funds.

As always, this is only general advice and a conversation with a financial adviser would give you a more detailed response, taking into account your entire financial goals.

The information contained in these responses are not legal, taxation or accounting advice. It is intended to provide general information only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should also obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This case study was prepared and issued by UniSuper Management Pty Ltd ABN 91 006 961 799, AFSL No: 235907, which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN 91 385 943 850). UniSuper Limited (ABN 54 006 027 121) is the trustee of the fund. UniSuper Advice is operated by UniSuper Management Pty Ltd, which is licensed to provide financial product advice to members.

Answered by Craig Naylor

Craig-Naylor-560x315

Craig has over 16 years’ experience in the financial services industry.

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