How to Take the Lottery Jackpot

A lottery jackpot is the most lucrative prize a person can win. But if you happen to win the big one, you have a lot of decisions to make about how to get your money.

The most common option is to take the entire winnings in a lump sum payout, but you can also choose annuities that pay you over 20 or 30 years. Each year, you’ll receive payments until the annuity expires or you die.

If you opt for the annuity option, the lottery will buy a package of bonds that will pay each future payment. It does this through several bond brokers. Each broker quotes a package of 25 bonds for the lottery, and then the investment bank buys the whole bundle at the best price available.

In this way, the lottery keeps costs down while still offering annuities to jackpot winners. However, if you aren’t sure how to invest your winnings, you should consult an accountant and financial planner before making this decision.

Another important aspect of deciding how to take the lottery money is the taxes involved. Many winners will have to pay federal, state and local taxes on their winnings.

For example, if you took the Mega Millions jackpot in 2017, you would be required to pay 24 percent to the IRS for federal taxes and 10 percent for state and local taxes. The rest of the prize would be taxed at a lower rate.