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Originally Posted by kj1980
So that's how the lottery system works in America...interesting.
So if I take it correctly, you can either choose:
A. One cash option which is roughly half the actual winnings
or
B. The whole cash winnings over the course of twenty-six years.
One question...is this before or after the government screws you with taxes? If so, I'd actually take the "A" option and invest it wisely because I don't want the government usurping my winnings every year I receive the winnings. Besides, if you invest it wisely (i.e.: mutual funds, government bonds, CDs, money-market accounts, IRAs), you might actually end up with larger money than taking the "B" option...
But then again, I hear that most Americans suck at keeping a stable savings account.
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Regardless of whether the winner goes for the $149 million or instead takes the lump sum $88.5 million, we're talking about gross winnings before federal and state taxes and fees are applied. If he went with the $88.5 million, all the taxes and fees on that could apply would be taken out before he received the lump sum payout. If he decided to go with the twenty-six year plan, the yearly payouts would again be likely to have the taxes and fees deducted before he received his yearly check. Either way the government will cut in line ahead of the winner to collect their share.
Only thing I'm not sure of is if he went with the 26 payments, would the taxes on each of the payments be static from year to year and based on the tax codes in effect at the time he won the money, or would the taxes be variable over the 26 years based on whatever revisions are made to the federal and state tax codes?