Subscribe to RSS Feed

We won Now what?


You just won the lottery jackpot  $100,000,000!  Most of us dream of this happening and imagine all the fabulous things we would buy and do.

But first you must decide how to receive the money, no doubt a perplexing decision for many winners.  The rest of us see them on TV gleefully accepting & displaying the “big check” with their smiling advisers looking on.

It should go without saying winning a big sum is an emotional experience with a decision to make soon.  This decision comes down to “Cash Option” or “Annuity” with no in between choice allowed by the lottery. 


The government assesses taxes at the rate of 7.75% Wisconsin state tax and 25% Federal tax  making the total tax 32.75% which is deducted/withheld from your winnings immediately.


 Cash Option – Winner receives about 50% of the advertised jackpot amount.  In our $100 million example that leaves the winner with $50 million to subtract taxes from. The net jackpot after taxes is $33 million; not too bad.                                                            

 Annuity – Wisconsin Megabucks winner receives the full advertised jackpot $100 million in 25 annual installments. In our $100 million example the winner gets $4,000,000 per year minus current taxes, nets $2.7 million per year for 25 years.  Nice yearly paycheck.  

The annuity option pays out twice as much, $67,250,000 after tax, this is the equivalent of earning a guaranteed 8.6% rate of return per year.   

Yet nearly every winner picks the cash option. Unless they are going to spend all the winnings right away; and if that’s what they want to do – I hope they enjoy their moment.  

If on the other hand they want the moment to be larger and last a lot longer; the annuity is the way to go.   Later if there is a change of heart all or part of the annuity’s future annual payments can be sold to investors for lump sums. Savvy investors recognize the value of annuity payments solid investments.  In today’s market enviroment an 8.4% guaranteed rate of return is a very good. 

It is unfortunate some advisers steer their clients away from annuities.  They either do not understand how annuities operate to achieve high returns for clients. Or perhaps the reason is once an annuity is setup there are no ongoing fees or commissions paid to representatives. 

My advice – If you win the big jackpot don’t settle for the one time “small” payout. Take the big payout over time with the annuity option. After a year or so when your emotions settle down. You can think logically and clearly again, you can change your mind and sell all or parts of the annuity payments for that upfront cash.

You may ask questions in the comments or contact me privately Tim Barton, ChFC

Tags: , , ,

37 Responses to $100 Million Lottery Winner – Now How To Get Your Money

  1. Peter Venable on June 29, 2012 at 8:04 am

    Lump Sum

    • Peter Venable on June 29, 2012 at 8:05 am

      I sure hope this is for real and not a hoax!

      • Avatar of Tim Barton
        Tim Barton on June 29, 2012 at 9:53 am

        I’m the real deal, no hoaxes here. ;)

    • Gigi on April 15, 2013 at 2:53 pm

      If I choose to receive payments weekly through PCH, that would be best, right?
      And what would happened if I died, woulld my family still be able to receive the money?

      • Avatar of Tim Barton
        Tim Barton on April 18, 2013 at 9:42 am

        Usually receiving the annuity payments rather than the lump sum payment is better. Annuity payments from lotteries and prize drawings are set to payout for a specified number of years so if you were to die your family or other named beneficiaries would receive the balance of your payments.

  2. Peter Venable on June 29, 2012 at 8:10 am

    How many years would I have to live for the anuity a smarter option?

    • Avatar of Tim Barton
      Tim Barton on June 29, 2012 at 9:59 am

      Considering only the math, you would be ahead in money by living for at least 12 years.

  3. Peter Venable on June 29, 2012 at 8:15 am

    If I choose the annuity payments, and I passed away before receiving full winnings, would my spouse be elgible to collect the rest?”

    • Avatar of Tim Barton
      Tim Barton on June 29, 2012 at 9:55 am

      In nearly all annuity payment plans your spouse or any other person you list as beneficiary will recieve the remaining payments. You could also pick your favorite charity.

  4. Peter Venable on June 29, 2012 at 9:12 am

    cash option

  5. John Martine on July 18, 2012 at 10:39 am

    I am 48, if I win don’t I have to live to 73 to collect all the winnings? I am under this impression that Illinois doesn’t allow the winnings to be left to someone else in case of death.If I get hit by a car at 64, my heirs lose a decent chunk of change.

    • Avatar of Tim Barton
      Tim Barton on July 18, 2012 at 12:48 pm

      If you were to die before you have received all of your annuity payments from the Illinois Lottery your heir or your estate would receive any remaining payments or depending on the prize could take the remaining amount as a lump sum. You do need to prepare a will or trust to designate your heirs.
      It is a common misconception that annuity payments are only good during one’s lifetime.
      Here is a link to Illinois Lottery Winners’ Handbook Page 4 & 5 Estate Planning and Forms describes the process.
      Are you in the enviable position of having won?

  6. Juice on October 27, 2012 at 3:18 pm

    If I Spent over 100 dollars on lottery tickets Before I Recieve my big winnings Can i Use those same lottery tickets To Alieveate Some Of the Tax Deductions on my Win?

    • Avatar of Tim Barton
      Tim Barton on October 29, 2012 at 10:34 am

      If you have not deducted them previosly as gambling losses.

  7. Juice on October 27, 2012 at 3:29 pm

    One More Question Tim If More Than 1 person wins the lottery. & it’s 100 million Are the winnings Split amongst the other winners? Thus Reducing the payout To Each Person? Or Is Each Individual person Entitled to $100 million

    • Avatar of Tim Barton
      Tim Barton on October 29, 2012 at 10:35 am

      Yes the lottery proceeds are split equally among all winning ticket holders so your payout would be reduced.

  8. James Whitaker on November 27, 2012 at 9:13 am


  9. Alvis Jenkins on January 16, 2013 at 7:20 pm

    Here’s what I will do if I ever win a mega million dollar lottery prize. I will be the first ever person to sue the lottery for unlawful federal income tax withholding. If you know the law, then you know I will prevail in “State” court. Why? Many reasons under current law. Notably because for Federal tax purposes, “Income” is a legal term. Does anyone out there know what income is of which has been defined by the US Supreme Court? If you have no income, then there can be no tax owed. All Federal tax forms are voluntarily submitted. That’s right, you give permission to have the tax withheld when you sign the form containing the jurat “Under penalties of perjury”. If the lottery withholds the tax on the full amount of the prize you won without your consent, they can be sued for extortion and conversion of funds. If the lottery tells you that you cannot receive your prize money unless you sign the tax form, then sign it but include the words next to your signature, “Signed under duress”. This allows you to file suit against the lottery. Why does the lottery state to you that the IRS requires them to withhold Federal income tax? Supposedly because the Lottery has been told by the IRS that if the tax is not collected, the prize winner may try to avoid the tax and the IRS would end up empty handed. It’s apparent, you, the prize winner cannot be trusted in paying any tax you are liable for. Did I say any tax you might be liable for? Are you liable for subtitle A, Title 26 taxes that are only lawfully paid by Federal employees? Lawfully paid by Federal employees only? Subtitle C, Title 26, specifically provides for Federal employees to pay the tax when they make a voluntary agreement with the employer by signing a W-4 tax form. Hey, wait a minute! A W-4 tax form, isn’t that the form most people of the several states file with their employer to have the Federal income tax withheld on their wages? Absolutely, but there is a problem with these people that pay Federal income tax on non-federal income. They commit perjury, because they are claiming that they have Federal income, (a corporate gain or profit) earned by Federal employment. So, the lotteries in all of the 43 current states are committing fraud against the big prize winners. What a shame that people will hand over to the IRS such large sums of federal reserve notes called dollars, when the IRS does nothing to deserve the cash! Just remember, if you know the tax law, you can sue the lottery for withholding tax without your consent, and you can sue for the amount withheld and other damages you might want to include. I can bet you that the lotteries of the several state governments will wake up to the truth if such a law suit ever happens, and the public will see the end of unlawful Federal income tax on citizens of the private sector that have no Federal occupation. Gee, I hope I’m the only winner of the powerball tonight!!

    • Jason on March 9, 2013 at 10:59 am

      It does seem unfair to withhold the taxes right away as its taking capital away from someone before the tax year is at an end…they could have bought some shares/etc and had a return on that money before their taxes were due, to take it immediately is to force money that is not theirs away from you.

      You have to pay taxes by the end of the tax year, hence the drop in share prices just prior to new year, this is like taking your mortgage payment for your house one year up front, it would not be allowed under law, yet they can do that with a lottery win?

    • Terry on April 24, 2013 at 5:09 pm

      What about Publisher Clearing House, do you have to choose cash or annuity? And do they force you to pay taxes that by law you should not have to pay. Should I sign (Signed under duress) on that check and form as well?

      • Avatar of Tim Barton
        Tim Barton on April 25, 2013 at 3:28 pm

        Some prizes through Publisher’s Clearing House offer annuity payments and as you receive these payments taxes both Federal and State are due on normal tax payment deadlines. Prize winnings are consider income. Even if you win a material object like a car or house you must pay taxes on the win.

    • Fact-Checker on March 13, 2014 at 6:59 pm

      Boy, are you wrong. That argument would never hold up in court.

      Read my response to your later post.

  10. ada on March 20, 2013 at 5:51 pm

    some one i no won 1 million dollars and took cash option he ended up with 468,000 that doesnt sound right to me .they took over hale for state and federal taxes

  11. James T. Cook on May 16, 2013 at 5:53 pm

    My question is a little different. Everywhere I read, I am told to get a team of financial advisors, should I win the lottery. I have heard countless horror stories of F.A.’s stealing money from clients. Is it possible to hire a financial advisor and only get advice without them ever actually seeing (as long as I pay them ) , the money? Second, is there a place to actually put your money and keep it safe? I’m not worried about making money off the interest, I would just want a place to keep the money so, I could think about how to invest and who to trust. Is there a place to store the money and still get it insured without creating a 100,000 bank accounts, that are insured? Lastly, as there is so much identity theft going on these days, will banks allow a person to keep accounts that are not accessible to the internet? This would seem to cut down on hackers stealing money. It would be nice to go to a bank and with proper I.D., tell them to move X amount of money from your non internet account, to your internet account. I know this is pie in the sky but, I would like to be able to just keep my money sonewhere, out of harms way until, I figured things out. Is that possible?

    • Avatar of Tim Barton
      Tim Barton on May 17, 2013 at 9:08 am

      Never ever let anyone take control of your money. Make sure you always have final approval for any investment or transfers.
      There are F.A.s who work as fee based consultants only and do no investing. They will usually recommend someone to do that for you and many times they receive additional compensation for the referral. Make sure there is a clear understanding of all this on the front side going in.

      It is better to have a team that includes:
      CPA who will give specific tax advise, a good CPA does not give investment advice if they do find a new CPA.
      An attorney for the preparation of any required legal documents, a good attorney does not give investment advice if they do find a new attorney.
      A stockbroker for advice on equity investments.
      An insurance based financial consultant who will help transfer the risk from you to an insurance company and work with your attorney on setting up trusts, estate plan and income flow.
      None of the above should have any of your money in any of their accounts, all accounts will be in your name and your spouse’s if applicable.

      If you select the annuity payments as described in my post not only will your money be 100% safe you will net more money and pay all of those advisors a lot less. Which may be why so many advisors- advise a winner to take the lump sum.

      Because annuity payments are safe, reliable and valuable there are investor groups who buy annuity payments. So if you need more money in the future you could sell part or all of your future annuity payments for a lump sum. Usually these private investor groups will pay more than what a winner would get from the lottery lump sum.

  12. Vladimir Abretta on May 19, 2013 at 12:25 am

    When my family wins The Big One, I would initially take the annuity option because the winnings will be SAFE in the lottery commission’s “bank” without needing FDIC insurance, LOL !! But after a couple of years, I may seek out some commercial-industrial real estate rental properties and cashout my lottery annuity for a discount, pay the gains taxes and buy those “hard assets”. I’m very concerned the US will soon face hyper inflation where the same cash buys fewer goods. Although I may be trading tit for tat and more management stress, I prefer to control my own net worth and have NEVER imagined retiring. Thanks for your advice Tim, it’s nice to read alternate perspectives, Thumbs Up!

  13. Suziesuzie on August 4, 2013 at 8:42 pm

    If I won, I would take it ALL in CASH and put it in numerous safety deposit boxes so the banks couldn’t make one penny on my money. Then I would set up something whereby I could make loans to others at very, very, low interest rates. Bypass the Federal Reserve, etc.

  14. cherylsplace on August 17, 2013 at 8:51 pm

    Ive been poor all of my life and snubbed by people looking down on me and my 8 kids. We didn’t seem to fit in, were made fun of because of our little run down house and our clothes that were given to us. My husband was a drunk and abandoned us and never came back., I’m in a wheelchair and cant walk, but I loved my kids so I couldn’t give up. Im getting a free divorce now in Texas because of my low income, so when I win the lottery, him and all the rest of the gossiper’s wont get nothing! Amen!

  15. J on September 10, 2013 at 9:08 pm

    Tim Barton, i live in CA. I heard when you go in and claim your winnings they give you a small amount upfront while you wait the 6 to 8 weeks. Is that true?

  16. Le on September 11, 2013 at 6:55 am

    Hi Tim,

    A question that I cannot get a specific answer too, HELP !!!!!! ok.. If I was holding the winning jackpot ticket for $10 million dollars, and I ask a friend to collect it for me so that I may remain discrete, we go to lawyers and my friend signs that she agrees…do she get the check in the mail at her house (question 1) or.. can she get the check by direct deposit (question 2) if by direct deposit can she give them my account number or does her name have to be on an account to get it deposited ( question 3) or can she use another address to have the check mailed too or will they mail it to the address on her license picture ID (question 3) or can she have the check sent directly to the lawyers office (question 4). I am just wondering how I can do this. Also if the taxes are paid in her name in Philadelphia pa, when she turns all the money over to me , will I have to pay all the same taxes again if she lists the money as a gift to me ( question 5)… these are all the questions I need help with before I do anything so that I know if I should collect my own winnings but I really have a trusted friend that will sign papers to agree to this but I am unsure how the check is handed out ..let’s base all these questions on taking the lump sum… Thank you for answering all the questions

  17. Romel Oku on October 10, 2013 at 5:03 pm

    Tim if I win 25 million dollars from the lottery how much will I have after the government has took some for taxes ?

  18. Alvis Jenkins on November 22, 2013 at 8:11 pm

    Lottery prize money is NOT INCOME!!!!!! If you allow a lottery to withhold federal tax on your winnings, then you are doing so as a ignorant citizen of the tax law.
    Sign the lottery’s required tax withholding form with an addition to your signature, John Handcock “Signed under duress in order to get paid”. This will give you ability to sue in “State” court, where the IRS has no jurisdiction.

    • Fact-Checker on March 13, 2014 at 6:54 pm

      Here’s your problem. IRS considers lottery payouts to be “gambling winnings” and the law provides for them to require 25% withholding on gambling winnings. (Go read IRS Publication 505 if you don’t believe me.)

      Sure, you can sue the lottery commission in state court, where the IRS has no jurisdiction, but you’ll lose because the commission will rightfully claim they were obeying federal law in requiring the withholdings.

      And you’ll end up paying not only for your attorney, but theirs.

      You, sir, are the ignorant one.

  19. mark anderson on April 2, 2014 at 10:43 am

    a tv program on lottery winners featured a female financial advisor who suggested in order to keep a winners identity anonymous to claim the prize using a blind trust.
    Any thoughts on that? Mark

    • Avatar of Tim Barton
      Tim Barton on April 3, 2014 at 8:14 am

      Lotteries do not usually allow a winner to stay anonymous. One of the conditions of playing the lotto is winners can be publically used to promote the lottery in order to get more future players. Most lottery rules forbid payments to trusts. The winner must take receipt of money, pay taxes and then write a check a trust.
      Keep in mind planners are trained to keep themselves and their firms involved to generate fees.

  20. Greg on April 14, 2014 at 10:35 am

    Even though I don’t live in Wisconsin I thought you gave excellent advice.

    I play the occasional scratcher game here in California and only play games with annuity payouts as an option, because my thought process pretty much parallels yours.

    If this is indicative of the advice you give your clients, they are lucky to have you as their financial consultant.

    Just wanted to share my opinion with you.

Leave a Reply

Your email address will not be published. Required fields are marked *