Do You Take A Lump Sum or Annuity Payments For Your Powerball Winnings?

Imagine for a moment that you won the Powerball! Congratulations! When you are about to claim your winnings, CA lottery asked: Do you want a lump sum or an installment payment over 30 years? What do you do?

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

With a lump-sum payment, you will need to pay the entire tax right away. With an annuity or installment payment, you will be taxed as you receive your payments every year. Here are some factors to consider in choosing your options:


1. If you are good with money management and have smart money habits.
2. If you want to have control of the entire winnings and wants flexibility.
3. If you think tax rate is going up.
4. If you can invest the money outside and earn a modest 3-4% return, then you will be way ahead investing a lump-sum payment compared to an annuity.

Annuity or installment payments

1. If you are a big-time spender and you are trying to protect yourself from YOU. Because the annuity is like a yearly guaranteed payments for the next 30 years.
2. If you think tax rate is going down.
3. You are not getting taxed on your investment income, because Powerball is investing your money.
4. If you die prematurely, the future unpaid payments become part of your estate. You can pay the estate tax by buying a life insurance policy to cover the tax bill or Powerball can convert the annuity into a cash lump sum.

So what’s the LowerMyTaxNow strategy? Looking at the factors, I would consider a hybrid approach. I will take the lump sum payment invest it in stocks, bonds, real estate, and in my own annuity or guaranteed payments. That way, I have the best of both worlds!

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Until then, this is Noel Dalmacio, your ultimate CPA at

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Noel Dalmacio, CPA, CFP, MS TAX
30 Corporate Park, Suite 102.
Irvine, CA 92606

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