A LOTTERY player has instantly lost hundreds of thousands of dollars from their prize pot.
They lost the money after snagging a $2 million scratch-off win earlier this month.
A lottery player is $2 million richer after a scratch-off jackpot win (stock image)[/caption]
They bought the scratch-off earlier this month at a local supermarket (stock image)[/caption]
Maryland Lottery officials confirmed the player bought the lucky ticket for the 200X The Cash game at a Giant Food supermarket in Owings Mills, about 20 miles northwest of downtown Baltimore.
Fortunately, the player came forward right away to claim the cash.
Maryland has one of the shortest lottery ticket claim windows in the United States at 182 days from the drawing date.
Given that the anonymous player’s win was well above $25,000, they also had to make an in-person appointment with the Maryland Lottery Claim Center in Baltimore to get their money, per the Maryland State Archives.
This was after they signed the back of the ticket to confirm the win.
Arguably, one of the toughest decisions to make in the lottery-winning process is how to collect the funds.
Winners are given the option of getting all of the cash up front in a one-time lump sum distribution or spread out over annuity payments for several years.
There’s a significant debate between lawyers and lottery experts as to which choice is better.
PROS AND CONS
Taking the annuity payments would allow for a consistent income stream and lessen the impact of certain tax implications, along with saving players from making any detrimental mistakes.
Still, once you choose the annuity payments, it’s locked in and can’t be changed.
With the lump sum, all the money is accessible right away and allows for opportunities to invest appropriately to create consistent income.
Hiring a financial advisor and lawyer is highly recommended to ensure that the best outcome for the winnings is reached.
Most players chose the lump sum, and so did the $2 million winner in Maryland.
The decision means they face the downside of the lump sum — taxes.
Lottery winnings: lump sum or annuity?
Players who win big on lottery tickets typically have a choice to make: lump sum or annuity?
The two payout methods can impact how much money you get from your prize.
Annuities pay out slowly in increments, often over 30 years.
Lump sums pay all at once but in a smaller amount, as taxes are withheld in one go. That means 24% of your prize goes to Uncle Sam right away. Many states tax winnings as well.
Annuities can provide winners time to set up the financial infrastructure required to take in a life-changing amount of money, but lump sums have the benefit of being taxed only once.
Inflation is also worth considering when making a choice, as payouts do not adjust with the value of a dollar. That means that you’ll likely be getting less valuable money towards the end of an annuity.
Each state and game pays out prizes differently, so it’s best to check with your state’s lottery to confirm payment policies. A financial advisor can also help you weigh the pros and cons of each option.
Experts have varying opinions on whether to take the lump sum or take the annuity.
VALUE VANISHED
The federal government imposes a 24% tax on lottery winnings above $5,000.
States set their rate, and Maryland’s is 8.75% for residents.
That means the $2 million winner had about $655,000 taken out before they saw any of the cash.
They walked away instead with approximately $1.34 million.
That’s still a considerable return on their $30 investment for the ticket.
A Maryland player this spring also faced a similar situation after winning $50,000 this year, losing $16,475 instantly.
