Some folks who are looking ahead have contacted us this week with a question that must come from their hope of winning the huge Mega Millions® jackpot. (The giant prize has climbed to an estimated $515 million annuity, $346.3 million lump-sump option for tonight’s drawing.) They asked how quickly after the jackpot is won that the winnings are actually available to the winner.
As you know, tickets in big-jackpot games like Powerball® and Mega Millions are sold across the country. Each lottery involved tracks its sales so that when the jackpot is won, they will know how much of the money will come from each jurisdiction.
After the drawing, all of the lotteries in the game transfer their share of the jackpot into a central account so the jackpot prize can be paid. It takes about two weeks for that process to be completed. If a winner comes forward to claim the jackpot before then, we make arrangements for them to receive the money as soon as it’s available.
If you claim your prize after two weeks, the jackpot money (either the lump-sum amount or the first of the annual annuitized payments, depending on the option you choose) can generally be transferred to you the next day.
Now you know, so you’ll be prepared to claim the jackpot if/when it’s your turn!
Hi, Marlon. If a jackpot winner chooses the annuity option, the lottery invests the money in the jackpot pool from the sale of tickets in the game. The winner then receives annual payments over time that add up to the total annuitized jackpot amount. The annual payments include the amount of money on hand from the sale of tickets plus the amount generated in interest over time. If the winner chooses the lump-sum option, they only receive the amount of money in the jackpot pool from the sale of tickets in the game. The interest money over time would not be part of the picture in that instance because the lottery would not invest the money. It would instead be paid out all at once in a lump-sum amount.
Posted by: Mary Neubauer | May 25, 2021 at 10:43 AM
Hi, Steve. State withholding of 5 percent applies to lottery prizes of more than $600 won in Iowa. An additional 24 percent federal withholding applies to lottery prizes of more than $5,000. The withholding is designed to cover the tax impact that a winner will have from winning a prize. But the actual amount the winner will owe in taxes in dependent upon their circumstances outside of winning the lottery. In some instances the withholding will be too much, in other instances, the withholding will not be enough. We encourage all our winners to consult with a tax expert to receive the details about the taxes that will be involved in their instance.
Posted by: Mary Neubauer | May 25, 2021 at 10:37 AM
Annual payments ? Does the payments come once a year from the interest of the principal ?
Posted by: Marlon. J Cunningham | May 24, 2021 at 10:46 AM
Interesting! Thanks for the info.
Posted by: MARY K KENNEDY | May 23, 2021 at 03:24 PM
What percentage in taxes goes to the state of Iowa. I have read various answers. Some articles say 5% others say Iowa collects the highest bracket percentage which currently sits at 8.53%.
Posted by: Steve | May 22, 2021 at 07:27 PM