Cash vs Annuity

If you win the jackpot in NY Lotto, Mega Millions or Powerball, or one of the top two prizes in Cash4Life, you face a number of important decisions upon claiming your prize. One of the first you will have to make is whether you want to receive your winnings in the form of a cash lump sum or annuity payments.

Use this page to find out more about these different payment options and decide in advance which one you would go for.

Cash Lump Sum

If you opt for the cash lump sum option you will receive a single payment amounting to the cash value of the advertised jackpot at the time of the draw. The most important point to note about the cash option is that it will be significantly less than the advertised jackpot, which takes into account any increases in payments over the term of the annuity.

For example, in March 2018 Richard Wahl from New Jersey was the sole winner of a Mega Millions jackpot advertised at $533 million. He chose to take the cash lump sum payout, so he walked away with $324 million, over $200 million less than if he had opted for the annuity.

Cash4Life annuities work slightly differently. The top prize in that game is advertised at $1,000 a day for life, while the second prize is $1,000 every week for life. If you win either of these prizes, you would also have the choice of taking a cash lump sum or an annuity, rather than the daily or weekly payments that the lottery advertises. The value of the cash lump sum will be determined by the New York Gaming Commission when you claim and it may depend on your age.

There are benefits to taking the cash option and it has proved the more popular choice with jackpot winners in recent years. This may be because they would rather have the entire sum safely deposited in their bank account to spend at will, or some may choose to invest it. By doing so, you could potentially generate an even better return on the money than if you took the annuity option, but all investments carry some degree of risk. The value of a lottery annuity, on the other hand, is guaranteed.

Annuity Payments

If you choose the annuity option, you receive the advertised jackpot amount over a number of years. You will receive an initial payment soon after claiming the prize and then further payments once a year for 29 years. They are graduated payments, meaning they increase in size every year, giving you much more value than the cash option, which doesn’t take these increases into account.

If annuity payments are below a certain value, such as when the prize is shared between multiple players, the winner or winners will automatically be paid the prize as a cash lump sum. For example, if the annual payments for a NY Lotto jackpot work out at less than $10,000 per winner, the annuity option will not be available and the prize will be paid out as a lump sum.

Cash4Life annuity payments are made for the rest of the winner’s life or for a minimum of 20 years. If you die before the minimum number of payments have been made, any outstanding payments are made to your estate.

Choosing Cash or Annuity Payments

You do not need to make the decision between cash or annuity payments when you buy your lottery ticket. Instead, you will have 60 days from the date you claim your prize to decide. If you don’t inform the New York Lottery of your preferred payment option in this time, you will be paid the prize as an annuity. Once you’ve chosen your payment option, you cannot reverse your decision.

You will receive your payment (or the first payment, in the case of an annuity) soon after your claim has been validated by the New York Gaming Commission. All payments will be made by direct deposit wire after your win has been verified and press events have been completed. If you claim your prize by mail, it’s important that you include a completed claim form and that all the information you provide is accurate. Your payment(s) may be delayed if you fail to provide the correct information.