Clock Is Ticking for New Jersey Lottery Winner To Claim $1.13B Jackpot as Experts Argue Over the Best Cashout Option

The New Jersey Lottery has been waiting for the $1.13 billion Mega Millions jackpot winner to claim the prize since March. The unclaimed ticket, which has a cash value of over $537 million, was sold in Neptune Township of Monmouth County, New Jersey. Lottery officials are urging all players to check their tickets for the winning numbers 07,11, 22, 29, and 38, with 04 as the Gold Mega Ball, as New Jersey lottery winners have a full year from the drawing date to claim prizes before the ticket expires.

Common For Winners To Take Time Before Claiming Monumental Prizes

Managing newfound wealth can be challenging, as risks of impulsive spending and giveaways to friends and family can quickly deplete savings. Many winners also take time to fine-tune their investment and spending plans before claiming the prize. However, some prefer anonymity. A New Jersey law passed in 2020 allows lottery winners to remain anonymous indefinitely, but identities are disclosed to the Internal Revenue Service if the prize is worth $600 or more. New Jersey can also withhold state and federal taxes from big prizes. Lottery officials want the winner to act quickly as the March Mega Millions ticket expires on March 26, 2025. They also advised the winner to decide on the payout method and follow steps like signing on the backside of the ticket before submitting it with a claim form. If the prize remains unclaimed, the funds are returned to the states depending on their contributions to the game.

Choosing Between Immediate Or Staggered Payments Determines Your Final Payout

The prize winner can take a reduced lump sum or staggered payments via annuities over the next three decades. The $1.13 billion ticket holder's final payout will drop to $537 million in case of a lump sum payment, where $129 million is lost to Federal Taxes at a 24% rate. The ticket holder will also face additional federal taxes since the prize money automatically places the winner in the top tax bracket. Furthermore, many states tax lottery winnings, including New Jersey, which imposes an 8% tax on all winnings above $500,000. The winner can choose the annuity option to pocket the whole billion dollars. The annuity option pays out the cash prize in annual instalments, which can offer winners sufficient time to seek fiduciary guidance and plan finances for better long-term outcomes. However, annuity income is also taxable, and the payouts are not adjusted for inflation, which means the winner could receive less valuable money at the end of the annuity term.

Enlisting The Help Of Experts

The sudden inflow of massive wealth can be overwhelming for many. Questions around managing and making the prize money work for you can become increasingly important. Your life goals, current liabilities, and tax preferences also play a part in determining the best cashout option. While experts believe winners should seek professional legal, financial, and tax advice to navigate a significant windfall, many share diverging views on how winners should claim their prizes.

Shark Tank's Kevin O'Leary believes in taking the lump sum amount. He suggests taking the entire prize after paying taxes, splitting it into an annuity to pay yourself, and investing the rest in stable dividend-paying stocks for passive income and capital appreciation. Several experts concur with his view that wisely investing the winning can translate to more money over time. However, huge winnings can upgrade a person's lifestyle overnight, which could give rise to uncontrollable impulsive spending. Simultaneously, navigating claims from family and relatives for a share of the winnings can also weigh heavily on close relationships. Some experts opined that winners with compulsive spending habits or facing potential claims from family members could take the annuity route for better financial control and a bigger lottery payout than the lump sum option.