Basics Of Setting Up Annuity Payment Plans}

Submitted by: Simon Volkov

Annuity payment refers to earnings acquired through annuity investments or structured settlements. The later is a financial contract that supplies ongoing payments to individuals who have been awarded monetary compensation through personal injury law suits and jackpot lottery winnings.

Annuity payment agreements are governed under regulations established by the Structured Settlement Protection Act. Currently, all but 4 states follow SSPA regulations that also consist of regulations regarding factoring transactions. These regulations regulate the transfer or sale of future annuity payments.

Annuities are guaranteed by life insurance companies. Earnings are invested to increase Annuitant’s financial portfolio. Annuity payment plans are developed to provide adequate income for medical expenses and basic living costs.

Structured settlements can be developed to provide required income for a couple of years or for life. Individuals that receive annuity payments from personal injury lawsuits do not have to pay state or federal income tax against earnings. However, proceeds earned through investments will be taxed.

Individuals that enter into annuity plans to receive lottery winnings over an extended period of time are responsible for paying taxes associated with annuity payments and investment proceeds.

Annuity plans can be an excellent choice for lottery winners because this strategy allows them to take home more money than if they accept lump sum cash. Lottery winners are allowed to select upfront cash or spread payments out over the course of 20 years using a structured settlement. Winners that choose cash payments don’t receive the full jackpot because taxes are taken out before prizes are distributed.

Lottery sweepstakes winners that elect to defer payments will receive more money over time. Obtaining smaller installments usually doesn’t alter tax brackets the way lump sum cash does. Postponed payments are subject to taxes at a reduced rate and can supply extra income. Any person who is fortunate to win a lotto jackpot ought to get advice from a financial planner or tax attorney before selecting their payment method.

Annuity payment plans provide substantial flexibility while in the preliminary stage. Once the structured settlement is filed through the court the terms cannot be altered without authorization of the court. For that reason is it vital to hire a structured settlement company with a solid track record to make certain payments are sufficient and will take care of health-related expenses and living costs.

Annuitants are prohibited from taking early distribution of benefits. Neither are they allowed to withdraw money from their account or use forthcoming payments as collateral to acquire bank loans or working capital.

Depending on the state of residence, Annuitants could possibly trade or sell future annuities in exchange for upfront cash. This strategy is forbidden in most states, but if permitted the transfer or purchase must be approved by the court. Annuitants need to be ready to supply facts as to how the sale or transfer will enhance their lifestyle.

Judges hardly ever allow Annuitants to sell future annuities when money is supplied through injury lawsuits. Courts are a little more lax when annuity payments are furnished for jackpot lottery winnings.

When annuity payment sales and transfers are authorized, Annuitants assign their rights to future payments to the funding source. Transferring future annuities is a complex process that is best managed by a structured settlement broker or lawyer.

About the Author: Simon Volkov is a cash flow note and real estate investor that participates in structured settlement funding. He provides an exclusive investment and personal finance article library that covers topics of

annuity payment

plans, cash flow notes, and other investing practices at

SimonVolkov.com

.

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