245 Million Powerball Jackpot

[megamania]

Okay I bought my ticket. I am going to win. Should I take it all at once in a lump sum of about 40 million or over 25 years thus getting about 80 million?

For that matter.... what to buy?

 

[Wystan]

How to take it: Lump Sum
What to buy: WOTC

 

[megamania]

Make them support 3.5 as well as this nasty icky rumor of 4e

 

[GlassJaw]

Well I'll guess we'll have to split it since I'm going to win too.

I'm definitely buying a new house with a huge game room filled with Dwarven Forge stuff.

 

[RichCsigs]

Lump Sum is the way to go. You get more money by taking a share year by year, but if something happens to you (ie - pass away), the rest of the money is lost. You don't get to will it to someone. Your significant other doesn't get it. They just stop sending checks.

At least that's what a customer who is an accountant told me.

 

[Quasqueton]

Should I take it all at once in a lump sum of about 40 million or over 25 years thus getting about 80 million?

How does 245M turn into 40M? I understand that taxes take about half, but that still leaves 122M.

With any other game, if someone said you'd only get 1/4 to 1/2 the actual announced prize money, people would sue. Only the government can get away with blatant false advertising.

Quasqueton

 

[Pyrex]

It's all about the fine print.

First there's the line where if you take the lump-sum you only get half the prize.

Then there's the *massive* federal income tax, plus possibly a state income tax depending on where you live...

 

[Blood Jester]

How does 245M turn into 40M? I understand that taxes take about half, but that still leaves 122M...

Interest.
In payments, they pay you the interest earned over time on the money they "hold".

 

[Olaf the Stout]

The US tax system sure does seem to suck for lottery winners in the US. If you win $10 million here in Australia, it means you get the $10 million, tax-free in one lump sum. There are no other strings attached or payment plans involved. The US system just sounds a bit deceptive for my liking. $245 million is actually only about $80 million at best. What a rip-off! Still, I imagine if you won the lot you really wouldn't care that much.

Olaf the Stout

 

[Glyfair]

Lump Sum is the way to go. You get more money by taking a share year by year, but if something happens to you (ie - pass away), the rest of the money is lost. You don't get to will it to someone. Your significant other doesn't get it. They just stop sending checks.

The Powerball site states:

A lottery prize is just like any other asset. You can pass any remaining annuity payments on to your heirs or to anyone else. The Powerball game will even cash out an annuity prize for an estate. This may make it easier for the estate to distribute the prize. It also may be necessary to cash out the annuity to pay Federal estate taxes.

Lots of good stuff in their FAQ.

How does 245M turn into 40M? I understand that taxes take about half, but that still leaves 122M.

With any other game, if someone said you'd only get 1/4 to 1/2 the actual announced prize money, people would sue. Only the government can get away with blatant false advertising.

They are pretty careful with their advertising and covering the fine print. They state in radio announcements in my state that the prize is for the annuity value and that the cash value is different (I forget the exact wording).

In general the experts recommend that you take the cash value. If you have a good investment advisor you will usually make more in the long term. However, this tends not to happen very often, which probably has something to do with the psychology of gamblers (encouraging them to throw the money around rather than investing it wisely).

IThen there's the *massive* federal income tax, plus possibly a state income tax depending on where you live...

I'm fortunate living here in DE (well, I will be if I win). We don't have state income tax taken out. In addition, we are one of the few states where we can be anonymous after winning.