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Tax Issues on Lump Sum vs. Annuity Payout

Topic closed. 4 replies. Last post 1 year ago by Stack47.

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South Carolina
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July 9, 2005
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Posted: January 8, 2016, 2:33 pm - IP Logged

What are the TAX ISSUES to consider regarding an annuity vs. lump sum payout for a $800+ Million Dollar Jackpot ??

On an annual basis, would you end up paying more yearly taxes on an annuity payout, or would you pay more taxes on a $450+ Million lump sum sitting in some form of  bank account ???

This may sound naive, but ...

You could actually spend an annuity of $15+ Million yearly, giving it away to humanitarian and charitable causes.

But ...

How do you shelter a $400+ Million lump sum payout WISELY ??

 

Where could you find an Honest Financial Adviser [and Attorney !!!] that you could TRUST, who could manage a large sum of money WISELY ??  Crazy  Searching for INTEGRITY of CHARACTER is sometimes Mind Boggling !!!  God Help Us !!!

 

 

 

    MaximumMillions's avatar - Lottery-013.jpg

    Germany
    Member #164603
    March 8, 2015
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    Posted: January 8, 2016, 2:45 pm - IP Logged

    You can stuff 50M$ into an insured CDARS account.

    German banks are insured for up to 9bln€ per customer in the case of Deutsche Bank. (Unfortunately I can't find an english version of the site that gives info on those options, I guess cross-border specifics are to complicated)

      LottoLucy's avatar - hereslucy header.jpg

      United States
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      Posted: January 8, 2016, 3:45 pm - IP Logged

      What are the TAX ISSUES to consider regarding an annuity vs. lump sum payout for a $800+ Million Dollar Jackpot ??

      On an annual basis, would you end up paying more yearly taxes on an annuity payout, or would you pay more taxes on a $450+ Million lump sum sitting in some form of  bank account ???

      This may sound naive, but ...

      You could actually spend an annuity of $15+ Million yearly, giving it away to humanitarian and charitable causes.

      But ...

      How do you shelter a $400+ Million lump sum payout WISELY ??

       

      Where could you find an Honest Financial Adviser [and Attorney !!!] that you could TRUST, who could manage a large sum of money WISELY ??  Crazy  Searching for INTEGRITY of CHARACTER is sometimes Mind Boggling !!!  God Help Us !!!

       

       

       

      I think that the biggest issues are taxes in the future and trust. 

      You know now that the top tax rate is 39.6%.  In the coming years are you willing to gamble it doesn't go up significantly?  Are you willing to gamble that year's check isn't going to come on time because the state government is shut down?

      As far as sheltering it you probably need people to help you but there are a lot of ways to keep the money somewhat safe.  There are whole dpartments at banks and places like fidelity investments that cater to high net worth individuals. Just don't put your eggs in one basket, get second opinions, and don't listen to anyone on the Internet.Wink

      Lotto Lucy

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        A long and winding road
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        June 10, 2005
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        Posted: January 8, 2016, 4:29 pm - IP Logged

        I think that the biggest issues are taxes in the future and trust. 

        You know now that the top tax rate is 39.6%.  In the coming years are you willing to gamble it doesn't go up significantly?  Are you willing to gamble that year's check isn't going to come on time because the state government is shut down?

        As far as sheltering it you probably need people to help you but there are a lot of ways to keep the money somewhat safe.  There are whole dpartments at banks and places like fidelity investments that cater to high net worth individuals. Just don't put your eggs in one basket, get second opinions, and don't listen to anyone on the Internet.Wink

        Well LottoLucy, I think that is fair and sound advice. So I am going to listen to you .

        As iterated, States CAN and DO increase there own Income taxes., so there is that to contend with. Correct, If no budget is passed, the yearly check just sits there...gaining interest for them .

        I encourage those of sound mind and good budget skills to take on the funds entirely. Have a vault built if need be.

        ~~Is it true, Is it kind,Is it necessary. ~~~

        pa:888,4445,6132,4444,8008

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          Kentucky
          United States
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          February 14, 2006
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          Posted: January 8, 2016, 8:50 pm - IP Logged

          What are the TAX ISSUES to consider regarding an annuity vs. lump sum payout for a $800+ Million Dollar Jackpot ??

          On an annual basis, would you end up paying more yearly taxes on an annuity payout, or would you pay more taxes on a $450+ Million lump sum sitting in some form of  bank account ???

          This may sound naive, but ...

          You could actually spend an annuity of $15+ Million yearly, giving it away to humanitarian and charitable causes.

          But ...

          How do you shelter a $400+ Million lump sum payout WISELY ??

           

          Where could you find an Honest Financial Adviser [and Attorney !!!] that you could TRUST, who could manage a large sum of money WISELY ??  Crazy  Searching for INTEGRITY of CHARACTER is sometimes Mind Boggling !!!  God Help Us !!!

           

           

           

          For starters USA MEGA shows how much cash, amounts of the yearly annuity payments, and the amount of state taxes deducted. Your other questions can be answered by financial planners, but as you pointed out "where does one find a reputable financial planner". If you take the cash, you'll pay a one time state and federal tax just like with any prize valued over $600, but there will be some tax on profitable future investments.

          The check that is issued to the jackpot prize winner reflects any state tax and 25% Federal tax. The jackpot amount will obviously put the winner(s) into the top 39.6% rate bracket so the winner will be responsible for the difference.