Paying off my mortgage was one of the biggest boosts to my F.I. It also boosted my over all well being.
That said, it isn't always appropriate in all cases.
In your case, I'd suggest you look at your income stream, and then determine what kind of income you can realize from your 401k before hitting the next bracket. You could intentionally realize the correct amount of income to not go up to the next bracket. Likewise, you can estimate next year and see if you'll be in a lower bracket the following year, and start then with the same strategy.
For example, if you are single make $40k, then you can realize $45k to pay off part of the lump sum and stay in the same bracket (25%). If you realize the whole 140k, you'll be doing much of it with the next bracket up.
That would be my strategy. Others may disagree.
There are multiple moving parts here to consider:
- When will you take your 401k income? How are you spreading it out? You'll have to realize the income and associated tax payment sometime.
- What is your mortgage rate? Is it worth an early payment?
- Are you realizing any significant tax advantage through a mortgage interest deduction?
- What kind of return do you think you can get with the money in your 401k versus the mortgage rate?
- Do you get peace of mind completely owning the roof over your head? Or maybe you don't mind that the bank owns part of it.