For the $303 million Mega Millions jackpot, the lump sum option is $176 million. For the $193 million Powerball jackpot, it’s $112.9 million. The other option is to take your winnings as an annuity, which would mean spreading it out over 30 years.
Many experts recommend taking the lump sum, because if it’s managed and invested properly, you could end up with more money over time than if you took payments spread out over several decades.
However, it’s important to know thyself.
“If you know you have trouble with compulsive spending or know that certain family members will be after your money, you may want to go the annuity route,” Shagawat said.
Remember, too, that either option comes with an immediate federal tax hit of 25 percent. That withholding would reduce Mega Millions’ cash option by $44 million to $132 million, and Powerball’s by $28.2 million to $84.7 million. You also should anticipate owing more to Uncle Sam at tax time.
On top of the IRS withholding, you’ll pay state taxes on the money unless you live where lottery wins are untaxed. For states that do take a piece, the rate ranges from a high of 8.82 percent in New York to a low of 2.9 percent in North Dakota, according to lottery site USAMega.com.