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Winning the Lottery BIG TIME: WHY do you get such a small payout??

T

thatsright

Diamond Member
CALLING ALL ACCOUNTANTS!!

I live here in MA, and some poor rich schmo in Lowell won the Mega-Millions jackpot of around $280,000,000. I know that you get more money over time if you take the Annuity option, compared to the lump sum payment. Thought even with that, the actual check you get seems to be greatly reduced from what you should be taking home if you win it BIG. But I thought that with any lottery winnings, the max Fed take is only about 39% taxes.

Most folks take the lump sum payment with these massive jackpots. But where the hell does all the $$ go from the gross jackpot, to the check they cut the winner?? i.e. with a $300Million jackpot, the Lump Sum payment would be $143 Million, and then the person would actually get a $82 million check?


Anyone know what this is all about, where does the money go??

(This would be a great fluff-filler piece for the Today show, or PrimeTimeLive, lol :laugh: )
 
State and local taxes still apply as well, there are more hands in the cookie jar that just Uncle Sam. And you would think that the lottery would prefer to have the winners take annuity payments, since they can pay those with future lottery proceeds, instead of having to fork over one large sum right now. Anyways, the extra half doesn't really go anywhere, since it never really existed in reality.
 
Originally posted by: 5ayle
taxes... bs
Click to expand...

Yeah, because gee, its just not fair that I dont get ALL of that 100 million. 50 million isnt enough, so since I cant have all 100 million I dont want any.

People who complain about taxes on lattery winnings are the absolute most delusional people evar.
 
Log into your bank's Web site. Look at your checking account and savings account. Compare whatever you see to $82,000,000.



Do you feel better now?
 
What the hell are "local" taxes? No municipality/county/city I have ever heard of has the right to collect income taxes. You are still better off with the lump sum payment anyway because your money is not collecting interest, you simply collect a set amount each year for a given number of years. Put that $74 million in a decent safe investment for the same amount of years you would get the annuity and the account would be bigger than the sum of the annuity payments. You take the annuity, I will be collecting $7 million a year in interest and living off of that......an no way spending it all so the lump sum would still be growing.
 
Originally posted by: Shockwave
Originally posted by: 5ayle
taxes... bs
Click to expand...

Yeah, because gee, its just not fair that I dont get ALL of that 100 million. 50 million isnt enough, so since I cant have all 100 million I dont want any.

People who complain about taxes on lattery winnings are the absolute most delusional people evar.
Click to expand...
Well technically, you won that amount of money. Your point is irrelevant
 
Cash payout = -1/2
taxes = -1/2

The annuity is based on what it will be worth. Cash payout is what it is worth now.
Taxes are taxes.
 
Originally posted by: DurocShark
300mil
Lump sum gets 1/2 = 150mil
Taxes get 40-60% depending on state. Average = 75mil

Ta da!
Click to expand...
Yeah, I don't see how this is confusing.

It's a penalty for taking the lump sum. As for who gets it, well.. I guess the lottery people get it, since it never leaves their pocket.

How much would winnings of 150mil pay out per year?
 
Put everything in the bank and you can live off the interest for the rest of your life and still have enough for generations to come. So who cares about the taxes?
 
You actually don't get more money over time if you take the annuity payments, due to the time value of money. Also, it's not some sort of "penalty" to take the lump sum. It is *always* better for you.
 
Originally posted by: Iron Woode
me pays no taxes on lottery winnings!

<---- lives in Canada 😀
Click to expand...

Yeah but then if you decide to take your winnings and move to the US you only have $10-$20.
 
Originally posted by: sygyzy
You actually don't get more money over time if you take the annuity payments, due to the time value of money. Also, it's not some sort of "penalty" to take the lump sum. It is *always* better for you.
Click to expand...
What do you mean it isn't a penalty?

What else could it be?

Taxes take half.

If you take the lump sum, it is halfed again.
 
Originally posted by: Eli
Originally posted by: sygyzy
You actually don't get more money over time if you take the annuity payments, due to the time value of money. Also, it's not some sort of "penalty" to take the lump sum. It is *always* better for you.
Click to expand...
What do you mean it isn't a penalty?

What else could it be?

Taxes take half.

If you take the lump sum, it is halfed again.
Click to expand...

From a calculator on the web

$75,000,000 compounded quarterly @ 4% for 20 years = $166,253,641
$7,500,000 initial + $7,500,000/yr for 19 years (same rate) = $230,012,013

I'd take the payments. Even if you spend 500K a year, you'd still have $214,677,879. Now if you spend 7.5 million a year, take the lump sum. 😀
 
Originally posted by: 95SS
Originally posted by: Eli
Originally posted by: sygyzy
You actually don't get more money over time if you take the annuity payments, due to the time value of money. Also, it's not some sort of "penalty" to take the lump sum. It is *always* better for you.
Click to expand...
What do you mean it isn't a penalty?

What else could it be?

Taxes take half.

If you take the lump sum, it is halfed again.
Click to expand...

From a calculator on the web

$75,000,000 compounded quarterly @ 4% for 20 years = $166,253,641
$7,500,000 initial + $7,500,000/yr for 19 years (same rate) = $230,012,013

I'd take the payments. Even if you spend 500K a year, you'd still have $214,677,879. Now if you spend 7.5 million a year, take the lump sum. 😀
Click to expand...
Well, I'm not talking about that. I think it's more complicated than that, since you also have to take into account how much the moneys vaule will go up each year. It gets pretty complex.

The OP asked where the money went when you take the lump sum, and my answer is that the lottery imposes a penalty for taking the lump sum; they get to keep the money.
 
Originally posted by: Eli
Originally posted by: 95SS
Originally posted by: Eli
Originally posted by: sygyzy
You actually don't get more money over time if you take the annuity payments, due to the time value of money. Also, it's not some sort of "penalty" to take the lump sum. It is *always* better for you.
Click to expand...
What do you mean it isn't a penalty?

What else could it be?

Taxes take half.

If you take the lump sum, it is halfed again.
Click to expand...

From a calculator on the web

$75,000,000 compounded quarterly @ 4% for 20 years = $166,253,641
$7,500,000 initial + $7,500,000/yr for 19 years (same rate) = $230,012,013

I'd take the payments. Even if you spend 500K a year, you'd still have $214,677,879. Now if you spend 7.5 million a year, take the lump sum. 😀
Click to expand...
Well, I'm not talking about that. I think it's more complicated than that, since you also have to take into account how much the moneys vaule will go up each year. It gets pretty complex.

The OP asked where the money went when you take the lump sum, and my answer is that the lottery imposes a penalty for taking the lump sum; they get to keep the money.
Click to expand...


I know, that was just a rudimentary calculation, showing with proper $$ management, it's better to take the annuity payments. But like I said in a previous post, I don't believe that there ever was any money missing, since if the winner chose payments, future lottery sales would pay for them. It reminds me a little of Social Security, in that the current players would be paying for the past winners prizes and so on. That's why I think that the lottery would prefer to have the winner take payments as well. Of course, I don't work for the lottery, so I could be completely wrong. 😛
 
With the tax rate being the being the same for Annuity Vs. Lump sum, isn't the State Lottery Ripping you off and using false advertising. I mean if you get the annuity and get $100 Million over 20 years, but only get $60 of that $100 Million with lump sum, isn't that false advertising. Sounds illegal to penalize you $40 million or so if you take lump sum up front, compared to you spreading it out over 20 years.

I mean, you will still get taxed up the ass whether its the annuity or lump sum, but why does the lottery get to withhold so much just because you want the lump sum?

Sounds illegal, and just generally wrong. Thought I know someone will be quick to point out how stupid of a post this one here is! Hurry up and get to it.....:thumbsup:

















(Sorry, my logic isn't in tip-top-shape at 4am)
 
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