|Posted: February 21, 2007, 10:51 am - IP Logged|
"It sounds to me like he's probably lucky" there's no cash option...
How can you say that? Mr Scheck probably thought the $1 million was lump sum. I'm sure he knows however that he would be liable for state and federal taxes regardless.
The NY Lottery, if it insists on annuity-only scratch games for those with fixed payouts (as opposed to the "lose for life" variety) should experiment with a $1 million scratch game with two versions with basically the same name. The lower tier prizes and odds of winning each should be the same in both versions; the one difference among the prizes is that the "traditional" version would have a top prize of 50k in 20 installments, while the "lump sum" version would have a top prize that would be paid in cash, equivalent to the present value of 50k in 20 yearly installments. This way there would be an "annuity-only" ticket, but there would be an "identical" game for those who prefer lump sum. The NY Lottery probably would have to print as many of the "cash" tickets as the "annuity" ones.
I can say it because he didn't win $1 million and what he thought is meaningless. He won an annuity that will pay out $1 million over 20 equal annual payments. If there was a cash option it would be much less than $1 million. The rest of your rant suggests that you understand the concept.
If there was a cash option and he took it he would get the cash less tax withholdings. If he sells the annuty for its cash value and doesn't have taxes withheld he will have more money in his pocket until he has to pay taxes. That's the only way he's going to get the money he needs for the treatment he wants.
I agree 100% that there should be a cash option for all games. If anything, it costs the state a few bucks more to administer the annuity, so I really don't understand what their reasoning is. Unfortunately, the game he played is annuity only and no amount of whining will change the fact that he voluntarily chose to play it anyway. If you don't like the deal you're offered the solution is to decline the offer, not take it and then whine about the bad deal you got.