Wednesday, May 12, 2021
The Mega Millions jackpot has climbed again, reaching $370 million (lump sum cash option $254.1 million). Of course, when we dream of winning the lottery, we are typically thinking of all of the things we would buy: a new house, new car, yacht, private jet, land, a business—the list goes on forever.
Though it is natural to have these thoughts, buying all of these things right off the bat isn't the smartest idea. With the odds of winning the Mega Millions being 1 in 302 million, it would be foolish to squander all of the money if you are the lucky one that wins.
At some point, someone is going to get lucky and become the winner. If that person happens to be you, here is some advice to consider:
You will likely have 6 months to a year to claim your prize, so you do not need to rush to the lottery headquarters to claim your prize. Take a second and breathe, your life is about to change forever.
Protect the ticket and your identity
Make a copy of your ticket and keep it in a safe place. You should also check if your state allows lottery winners to remain anonymous. If they do, take that option.
Lump Sum v. Annuity
For the $370 million jackpot you could choose the lump sum cash option ($254.1 million) or get an annuity that pays out over 30 years.
Most people choose the lump sum option, as you get more control over the money this way.
The Tax Bite
You're going to pay a lot in taxes, so just expect that.
With the lump sum option, the required 24% federal tax withholding would shave off $61 million, leaving you with $193.1 million.
See Sarah O'Brien, Mega Millions jackpot surges to $370 million. Here are tips for handling the windfall if you win, CNBC, May 5, 2021.
Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.