The First 90 Days After a Big Check

Days 1 to 7: Do almost nothing

The first move is no move.

When a large amount of money arrives, there's pressure to act. Pay off the house. Help the kids. Buy the truck. Invest it right away before you "miss out." Listen to the relative, the neighbor, or the salesperson who suddenly has great ideas.

Resist all of it for now. There's almost never a financial decision involving a large sum that has to be made this week. The exceptions are specific deadlines, like certain rollover windows, which we'll get to. Most other things can wait.

During the first week, your only jobs are:

• Know exactly what you received. How much, in what form, and from where.
• Find out if there are deadlines. Especially around rollovers, tax elections, or benefit choices.
• Put the money somewhere safe. More on that below.
• Don't announce it. The fewer people who know, the fewer requests you'll have to turn down.

If you're dealing with an inheritance, you may also be grieving. That's one more reason to wait. Big financial decisions made in the middle of grief are often ones people wish they could take back.

Put the money somewhere safe

While you figure out the plan, the money needs a temporary home that's safe and accessible.

Good options include:

• A high-yield savings account at a bank or credit union
• A money market fund in a brokerage account
• Short-term Treasury bills

With short-term rates higher than they've been in years, safe places are actually paying something right now. In early September 2026, some top high-yield savings accounts were paying a little over 4%.

Watch the insurance limits

FDIC insurance at banks, and NCUA insurance at credit unions, generally cover up to $250,000 per depositor, per institution, per ownership category. If your windfall is larger than that, you may want to spread it across more than one institution or use accounts structured to extend coverage. A money market fund or Treasury bills in a brokerage account work differently, since they aren't bank deposits.

Don't rush it into the market

"Investing it right away" feels productive. But putting a large sum into stocks before you have a plan can mean taking on risk you haven't thought through, or needing to sell at a bad time to cover something you forgot about. There's time to invest once you know what the money is for.

Days 8 to 30: Understand the taxes

Taxes are where windfalls most often go wrong, because every type of windfall is taxed differently.

Retirement plan payouts, including DROP

If you're receiving money from a retirement plan, including a DROP payout, how you take it can make a big difference.

A direct rollover moves the money straight from the plan to another eligible retirement account, like an IRA or another employer plan. Generally, no tax is due at the time of the rollover, and the money continues to grow tax-deferred.

Taking it as cash means the money is generally taxable income in the year you receive it. And if it's paid to you directly, the plan is generally required to withhold 20% for federal taxes, even if you intend to roll it over yourself later.

A 60-day rollover lets you roll over money that was paid to you within 60 days. But because of the 20% withholding, you'd need to make up that amount from other savings to roll over the full amount. Otherwise, the withheld portion can be treated as a taxable distribution.

A combination is often possible, with part rolled over and part taken as cash.

For FRS members leaving DROP, the payout choice interacts with a lot of other things: your tax bracket that year, your Medicare premiums two years later, whether you'd qualify for health insurance subsidies if you're under 65, and how you plan to use the money over time. DROP rules are specific, and I'm not going to rank the options, because the right choice depends on your full situation. But I will say this: it's one of the most consequential financial decisions an FRS member makes, and it deserves careful planning before the paperwork is signed.

Inheritances

Inherited money is taxed differently depending on what you inherit.

• Cash and most assets. In general, beneficiaries don't pay federal income tax just for receiving an inheritance. Florida has no state inheritance tax.
• Inherited investments in a taxable account. Many inherited assets receive what's called a step-up in basis, meaning their cost for tax purposes is reset to their value at the time of death. That can greatly reduce capital gains taxes if you sell.
• Inherited IRAs and retirement accounts. These are different. Withdrawals from inherited traditional IRAs and retirement plans are generally taxable income. Under current rules, most non-spouse beneficiaries have to empty an inherited account within 10 years, and some also have to take annual withdrawals during that time. Spouses often have more options.
• Life insurance. Death benefits are generally not taxable income to the beneficiary.

Inherited retirement accounts in particular have rules that are easy to get wrong, and the timing of withdrawals can make a big difference in how much tax you pay.

Legal settlements

How a settlement is taxed depends on what it's for. In general, damages received for personal physical injuries or physical sickness are not taxable. But other parts of settlements, like punitive damages, interest, lost wages in some cases, and certain other types of awards, may be taxable. The settlement agreement's wording matters.

Home and business sales

Selling a primary home may qualify for a capital gains exclusion if you meet certain ownership and use requirements. Selling a business, rental property, or other investment can create capital gains and other taxes. The details depend on the specifics.

The ripple effects

A big increase in income in a single year can affect more than your income tax:

• Medicare premiums. Medicare uses your income from two years earlier to set premiums. A big spike can raise your Part B and Part D costs two years later.
• Health insurance subsidies. If you're under 65 and buying marketplace coverage, a jump in income can push you over the subsidy cliff and cost you your entire subsidy for that year.
• Taxes on Social Security. More income can make more of your Social Security benefits taxable.

That's why the timing and form of a windfall matter so much. The same dollars can cost very different amounts depending on how and when they show up on your tax return.

This is the point where a tax professional becomes essential. Before you make any irreversible choice, like a rollover election or a large withdrawal, it's worth having someone run the numbers.

Days 31 to 60: Take stock of your whole picture

Once you understand the money and the taxes, zoom out. A windfall doesn't exist on its own. It lands in the middle of everything else you have going on.

Write down:

• What you own. Retirement accounts, savings, investments, your home, and anything else.
• What you owe. Mortgage, car loans, credit cards, student loans, and any other debt, with interest rates.
• What you need. Your monthly expenses now, and what they'll look like in retirement if you're close.
• What's coming. Known big expenses in the next few years, like a roof, a car, college, or a wedding.
• What matters to you. Security, helping family, travel, leaving something behind, giving to causes you care about.

That last item is the one people skip. But it's the one that turns a pile of money into a plan.

Days 61 to 90: Make the big decisions, in order

Now you're ready to decide. Here's an order many people find helpful. It isn't a rule. It's a way to make sure the foundations come first.

1. Set aside the taxes

If any part of the windfall will be taxable, set aside enough to cover the tax before doing anything else.

2. Fill your emergency fund

Make sure you have a solid cash cushion. For retirees, that may include a year or more of expected spending in safe places, so you're not forced to sell investments during a downturn.

3. Deal with high-interest debt

Paying off credit cards or other high-interest debt is often one of the best uses of a windfall. Paying off a card charging 22% is a guaranteed return that's hard to beat.

Lower-interest debt, like a mortgage at 3%, is a different decision. Paying it off can bring real peace of mind. It can also mean tying up money in your home that might do more for you elsewhere. There's no single right answer.

4. Cover near-term needs

Set aside money for known expenses in the next few years in safe places, like CDs or Treasury bills that mature when you need the money.

5. Invest the long-term money

Money you won't need for years can be invested for growth, in line with your timeline and your comfort with risk. For a very large amount, some people choose to invest gradually over a period of months rather than all at once, to reduce the risk of bad timing. There are trade-offs either way.

6. Decide what to give

If you want to help family or give to causes you care about, decide on an amount on purpose. Some people give a set amount now. Some set up gifts over time. Some use strategies that can have tax advantages. Deciding the amount in advance makes it easier to be generous without putting your own security at risk.

7. Update your estate plan

A windfall is a good reason to review your will, beneficiary designations, and powers of attorney. For FRS members, it's worth remembering that entering DROP affects prior beneficiary designations, so anyone who has gone through DROP needs to confirm their current designations are in place.

Protecting yourself from the pressure

A large sum of money attracts attention. Some of it is well-meaning. Some of it isn't.

Family and friends

Requests from family can be the hardest. A few approaches help:

• Decide your giving budget before anyone asks. Then you're answering from a plan, not in the moment.
• Know the difference between a gift and a loan. Loans to family often don't get repaid, and that can strain relationships. Some people only lend what they'd be comfortable never seeing again.
• It's okay to say, "I've committed that money to a plan." You don't owe anyone a detailed explanation.

Salespeople

When people know you have money, pitches follow. Be cautious with anyone who:

• Pressures you to act quickly
• Promises guaranteed high returns
• Pushes complex products you don't fully understand
• Is vague about how they get paid

It's always fair to ask anyone giving you financial advice how they're paid, whether they're a fiduciary legally required to act in your best interest, and whether they're registered. You can look up investment advisers at adviserinfo.sec.gov and brokers at brokercheck.finra.org.

Scams

Scammers watch for life events like retirements, deaths, and settlements. Be very careful with unexpected calls, emails, or texts about your money, especially anything asking you to move money quickly or share account information. Verify by calling institutions directly at numbers you already have.

The feelings are real too

This part doesn't show up in most financial articles, but it matters.

A windfall can bring up complicated feelings. An inheritance can come with grief and guilt. A settlement can be tied to a painful event. A DROP payout marks the end of a career that was a big part of your identity. Even happy windfalls can bring stress, family tension, and a fear of doing the wrong thing.

Some people talk about "sudden wealth" stress, the anxiety that comes with suddenly having more money than you're used to managing. It's normal. Giving yourself time, getting good information, and having a plan all help.

What I'm not going to do

I'm not going to tell you exactly what to do with your windfall. That depends on the type of money, your taxes, your family, your goals, and your timeline. And for FRS members, I'm not going to rank DROP payout options, because each has real trade-offs.

What I will say is this. When it comes down to it, the most expensive windfall mistakes aren't usually bad investments. They're decisions made too fast: a rollover done wrong, a lump sum taken without seeing the tax bill, or money given away before there was a plan.

Let's build your 90-day plan together

A DROP payout, an inheritance, or a settlement might be the largest amount of money you ever handle at one time. It deserves more than a quick decision at a kitchen table.

This is exactly where I can help. We'll map out what you received and how it's taxed, look at how it affects your Medicare premiums, health insurance, and Social Security taxes, decide where it should live and when, and build a plan around what actually matters to you. If you're an FRS member approaching the end of DROP, we'll walk through your payout choices and how each one fits your retirement before anything gets signed.

I work as a fiduciary, which means I'm required to act in your best interest. I don't sell products, and I don't earn commissions.

The money can wait a few weeks. The decisions deserve the time.

Frequently asked questions

What should I do first with a large sum of money?

Pause before making big decisions. Put the money somewhere safe and accessible, like a high-yield savings account or money market fund, find out whether there are any deadlines, and understand the tax consequences before acting.

How are DROP payouts taxed?

It depends on how you take them. Amounts rolled over directly to an eligible retirement account are generally not taxed at the time of rollover. Amounts paid to you are generally taxable income in that year, and the plan is generally required to withhold 20% for federal taxes. A tax professional can help you evaluate the options.

Do I pay taxes on an inheritance?

Beneficiaries generally don't owe federal income tax just for receiving an inheritance, and Florida has no inheritance tax. However, withdrawals from inherited traditional IRAs and retirement accounts are generally taxable, and most non-spouse beneficiaries must empty those accounts within 10 years.

Are legal settlements taxable?

It depends on what the settlement is for. Damages for personal physical injuries or physical sickness are generally not taxable, while punitive damages, interest, and some other types of awards may be.

Should I pay off my mortgage with a windfall?

It depends on your interest rate, your other goals, your emergency savings, and how much peace of mind it would bring you. Paying off high-interest debt usually comes before paying off a low-rate mortgage.

Can a lump sum affect my Medicare premiums?

Yes. Medicare premiums are based on income from two years earlier, so a large taxable lump sum can raise your Part B and Part D premiums two years later.

Educational content only. Not individualized investment, tax, or legal advice. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Consult a qualified tax professional regarding your specific situation.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.