2007-01-02 04:15:55 · 9 answers · asked by dbarnes3 4 in Business & Finance ➔ Personal Finance
Its always better to take lump sum.. You pay all the taxes up front therefore you are not subject to changes in tax laws in the future when you are getting the payment .. Its called an Annuity...
Once you pay the taxes that money is yours and you will only pay on the earning from that amount...
2007-01-02 08:56:17 · answer #1 · answered by Greg D 1 · 0⤊ 0⤋
it really depends on ur financial status. If you need money right then i'd take the large lump sum and not worry about the taxes but if you dont have any financial needs then the multiple payments would be better.
Tax wise: one large lump sum
2007-01-02 04:21:18 · answer #2 · answered by LC 2 · 0⤊ 0⤋
Depends on many factors.
First, calculate how much you will receive each way. Usually more if you do the payments. But, its usually at least a 20 year plan. If you die, no one will be able to collect the funds.
In the lump sum, you will get slammed up front with taxes, 50 %, but the money is there for you and your heirs.
2007-01-02 04:18:54 · answer #3 · answered by Dog Lover 7 · 0⤊ 0⤋
It entirely depends on what you will do with the money when you get it and your fiscal responsibility. If you are well behaved financially it always better to take lump sum upfront as you can get a better return on your investment over the time horizon by simply putting the money in a savings account than taking it over a long period. Remember that a $ today is worth more than one tomorrow-
2007-01-02 04:54:49 · answer #4 · answered by nopretentions 2 · 0⤊ 0⤋
Never ever ever take annuity payments, who cares about the tax bill. Problem with annuity payments, what if someone hits for $40mil , then god forbid they die a year later? Take the lump sum and reinvest it. Investing a lump sum will get you back a nice conservative 5-6%. If you take the annuity stream, your lifestyle becomes "controlled" telling you what to spend.
Only time I would use the annuity stream payout is for a relative so they don't blow it all or kids, or someone who is reckless with money. I always opt for the Lump sum payout, same with Pension Plans. "YOU" need to be in control of your money, not someone else.
2007-01-02 04:46:42 · answer #5 · answered by godzillasagoodman 2 · 0⤊ 0⤋
It depends on how much you win, how you would invest the money if you took it all at once, what your expected income would be on the investment, what your current tax situation is, etc...
Pretty hard to to give a general answer. Many people don't have the expertise to wisely invest the money with someone who is 100% trustworthy. Many times people manage to squander their windfall or lose it in get rich quicker investments which are too good to be true.
So for those reasons alone I like the multiple payments. At least that way you won't be broke for a long long time.
2007-01-02 04:23:35 · answer #6 · answered by aiguyaiguy 4 · 0⤊ 0⤋
Most people would be better off to take the payments since a lot of people would do something stupid and blow or lose the whole amount in a very short time. It would be harder to do that (though not impossible) if you dont have access to all of it.
2007-01-02 04:25:38 · answer #7 · answered by fat_albert_999 5 · 0⤊ 0⤋
If you took it lump sum, you could invest a significant amount of it in legal tax shelters such as municipal bonds, etc. You could theoretically end up with more money than if you'd taken the payout-over-time.
2007-01-02 04:24:59 · answer #8 · answered by Anonymous · 1⤊ 0⤋
Tax wise - because of the amount of monies - no difference - get a tax specialist to help you!@~
2007-01-02 04:21:36 · answer #9 · answered by nswblue 6 · 0⤊ 0⤋