You listen to the winning numbers being called out, you check your ticket, and….you’ve won! Whether it’s a couple of hundred dollars or a jackpot amount, winning the lottery feels great!
But what happens next? What are the lottery payout rules? And what is the best decision for you?
Keep reading to learn everything you need to know about lottery payouts.
Lottery Payout Options
If you win the lottery, you’re not going to wake up in the morning with a ten-figure amount deposited into your account. You have an important decision to make first. You can choose between a lottery annuity or a lump sum.
A lump sum is when you receive all of the money at once after tax deductions.
An annuity, on the other hand, distributes the sum over annual payments for a fixed period of time. The type of annuity depends on the lottery company. For example. Powerball offers the option of 30 payments over 29 years.
So, which is the best for you? If you’re wanting to immediately invest in financial options such as real estate or stocks, a lump sum is the best choice.
However, if you want the best bang for your buck, annuity payouts come closer to the jackpot amount after tax deductions. It also protects you from extravagant purchases and squandering all of your money at once.
It’s important to note that annuities are not flexible. So, you cannot decide after a couple of years to receive the rest of the money in the remaining lump sum.
You can hire the expertise of financial companies to assist with annuity payments. Check it out here.
How Long Until You Get the Money?
You’ll be happy to know that the lottery prize money gets processed and paid out pretty quickly. Of course, the more money it is, the longer it will take to payout.
Small prizes of a couple of hundred dollars are paid immediately. Mid-range prizes are usually the same day or the next working day. If you’ve hit the jackpot, you can expect your winnings to arrive in five to ten working days.
Do You Have to Claim Your Prize Immediately?
With a Powerball ticket, you have between 90 days to one year after the draw to claim the winnings. The tickets have an expiration day at the back and once that day has passed, your winnings are forfeited.
The same goes for Mega Millions and the time limit is based on where you live. For example, it’s 90 days in New Mexico, but one year in Kansas.
Understanding Lottery Payout Rules
If you’ve won a considerable amount of money, it’s important to understand the lottery payout rules so that you can make the best financial decision. Take into account the taxes, annuity that the company offers, and your current financial situation.
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