Lump-Sum vs. Annuity Payments To illustrate how lump-sum and annuity payments work, imagine you won $10 million in the lottery. If you took all the winnings as a lump-sum payment, they would be subject to income tax in that year, and you would be in the highest tax bracket. However,...
To illustrate how lump-sum andannuity paymentswork, imagine you win $10 million in the lottery. If you take the lump-sum payment, the entire winnings would be subject toincome taxin that year, and you would be in the highesttax bracket. However, if you choose theannuity option, the paym...
A lump sum payment is a one-time payment, often made in the form of cash. Learn what a lump sum payment is, how it is used, and the tax implications.
Lauren Lyons Cole
The person has a choice of receiving a lump sum of $8,500 or a monthly payment of $77 for the rest of the life. This amount does not change, it stays the same for the life of the annuitant. The person opts for monthly payment because the annuity calculations by insurance companies wh...