Tags: powerball | winnings | take | annuity | 30 years | payout

NY Times: If You Win Lottery, Take Annuity

Image:  NY Times: If You Win Lottery, Take Annuity
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By    |   Wednesday, 13 Jan 2016 09:47 PM

Though many investment experts advise taking a lump-sum payment if you win the Powerball, New York Times columnist Josh Barro says there are plenty of good reasons to take the annuity, which pays out annually over 30 years. 

To start, the annuity is the only way to actually get the entire $1.5 billion. If you opt for the lump sum, you'll be paid only $930 million before taxes.

Though you might not live 30 years, the annuity continues paying your estate through 2045, so your heirs can enjoy your largess after you die.

There are also tax advantages. By taking the annuity, the government essentially invests your money for you. That way, you have to pay tax only on the money when you receive it rather than paying income tax again when you invest it.

On the other hand, if you die before receiving all the money, the IRS collects estate tax on the value of the future earnings. If you die before you've collected enough for your heirs to pay the tax, they'll be in the hole. Powerball will convert an annuity to a lump sum in such an instance, but only in the states that allow for it.

Perhaps the biggest advantage, Barro argues, is protecting you from your own overspending. Many lottery winners end up squandering their winnings within a few years, but with a 30-year annuity, even if the money from each year gets wasted, there's always another check coming next year.

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Though many investment experts advise taking a lump-sum payment if you win the Powerball, New York Times columnist Josh Barro says there are plenty of good reasons to take the annuity, which pays out annually over 30 years. To start, the annuity is the only way to actually...
powerball, winnings, take, annuity, 30 years, payout
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2016-47-13
Wednesday, 13 Jan 2016 09:47 PM
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