An annuity is paid out over several years whereas a lump-sum payout is a one-time payment. When a jackpot is won, each lottery participating in that particular game forwards its share of the proceeds to make the jackpot payment.
The annuity option includes the amount in interest that would be generated over time and is therefore a larger amount than the lump-sum option.
If the winner chooses the annuity option, the lottery invests the money available from the sale of tickets for that drawing. Payments are made over a number of years, with the total that the winner receives equalling the advertised annuity jackpot amount. That total includes the initial amount invested plus the interest generated through the years.
If the winner chooses the lump-sum option, the one-time payment that is made includes only the money on hand from the sale of tickets for the drawing. There is no interest money available because the winner chose to receive the winnings up front. The "rest of the money" in that instance doesn't exist.
Here in Iowa, you have 60 days from the time that you claim your jackpot prize to decide how you want to receive it.
Powerball, Mega Millions and Lucky for Life offer the option of paying the jackpot/top prize out in a lump sum or an annuity payment. Beginning in May 2013, Hot Lotto changed from offering an annuity prize option to a prize paid as a lump-sum payment with all state and federal withholding taxes paid for the winner. All or Nothing, Pick 3 and Pick 4 only offer cash payouts. Some scratch games also offer the annuity option, but that list changes over time.
This depends on the individual's specific circumstances and needs. The lottery suggests the winner contact a trusted financial or legal adviser prior to making this decision. The winner has 60 days from the date the prize is claimed to decide.
Once the money is won, it always belongs to the winner. Iowa law provides that if the winner should die, the money would go to the winner's estate. The lottery will make future payments as determined by the estate or the court.
The Iowa Lottery offers a big jackpot game like Powerball because it appeals to many customers. The lottery's sales history shows sales grow as the jackpot grows. Regular players continue to play and new players and occasional players also get into the game. By capping the jackpot, the lottery would never get the attention of those players who like to play for really big money.
Unclaimed Powerball, Mega Millions, Hot Lotto and Lucky for Life jackpots go back to the states in the proportion of sales for that draw. Unclaimed prizes, other than the jackpot, go into prize pools for future games, so players in Iowa have another chance at the cash. Every year, many smaller prizes do go unclaimed, so check your tickets!
Yes, players can keep playing even after they've won a jackpot.
In Powerball, Mega Millions, Hot Lotto and Lucky for Life, about two weeks after a player brings in the winning ticket, the lottery can cut the winner the first check. (It takes that amount of time for the rest of the states in the game to send money to the winning state.) For all other games, players can get their money the same day they bring their winning ticket to the lottery. Generally about 45 minutes after players walk in the door, they walk out with a check!
Prize winners who live in Iowa may be able to assign winnings through the court system. The lottery will make payments according to court order.