You can buy a lot of lottery tickets with that money…
This attitude is how people who win big jackpots end up losing it all.
It might be more difficult to move it to different accounts. For example my Schwab account is already linked to my checking account so it would make since to dump it in checking then transfer some to my brokerage account. Then wire some to my credit union account. Use my app to put some in my saving account.
24% withholding, theoretically you’d settle at tax time and get a refund if your liability is lesser or owe more if greater. In a mega win, almost certainly the latter. California FTB does not tax their own lottery, but will if you win another state’s lottery. PowerBall is a multi-state (45 states) lotto which CA is a member.
Beyond what you should do, yes OP you can put it into your basic no frills checking account, there could be a hold on funds that’s triggered automatically but a lead teller can override this. Mega jackpots won’t just mail you a check though. The advantages to getting an upgraded account are usually interest-bearing on the funds. After that you’d have greater returns in alternative investments which is where the financial advisor comes into play.
And of course most large jackpots allow a choice between a lesser lump sum winning or an annuity (over 29 years for PowerBall). If you’re financially responsible the lump is a better choice.
An acquaintance/co-worker won pretty large on The Price is Right. IIRC, it was two cars, a fur coat, some appliances, and some smaller ‘parting gifts’. I think at the time he was pretty fresh out of college, so the winnings hit him at the right time. He sold one car, kept the other, gave the fur coat to his mom, and I don’t know what he did with the rest. TPiR gave him some tax docs (1099?), but when the next April rolled around, Tim was surprised at how much Uncle Sam wanted from him. All those winnings were considered income, and at their full MSRP, not what they would have cost him in the store.
I don’t think Tim won any cash on the show, so it’s not like TPiR could deduct estimated taxes from his winnings, so that may have been the difference.
Is there any sort of practical bank-policy limit on how much money can be moved at a time? Suppose somehow $400 million in Powerball money went into my checking account with Chase Bank or Bank of America, would those websites just let a person click and transfer that $400 million into some high-interest savings account as if it were just $400?
I’m not aware of any laws or legal limits, but each bank will have their own limits for a simple ACH transfer that are 4 digit amounts. Wire transfers (<$100 cost associated) or cutting a cashier’s check (fre or cheap) would be a more efficient way of moving money.
Secrecy might well be advantageous for winners, but required-disclosure is better for trusting that the game is fair.
If no winners need be disclosed, then all jackpots could be going to relatives of the Governor—and no one would know the game was rigged. (Of course that would apply only to single-state games, not to multi-state games like Powerball.)
The end up losing it all because they don’t understand the concept of materiality. $25,000 a day is nothing if you have $900 million. But if you treat $25,000; $2 million; and $200 million as the same, over time, you may go broke.
In the short term, sure, talk to your bank and ask them to open whatever account is appropriate for ultra-high net worth clients (typically above $100 million) so you can deposit your check.
Long term, that much money you may want to open a “family office”. That kind of money, you basically need to have what amounts to a small full time wealth management and legal firm to manage investments, estate planning, taxes, and any legal issues that arise.
Seriously, if you have $100M, who gives a hoot about $25,000? You’ll make that in a day or two once the proper location is settled. No need to go all Scrooge McBezos over a piddly amount, but be careful long term. Just keep in mind, This is short term. Longer term, have the better plan everyone here is talking about - investments, bonds (if you want security over more wealth). Me? If I had $100M I’d put $25M in some highly dependable bonds and invest the other $70 - and $5M to blow on toys etc. in the next year. That way if the whole $70M is lost, I’m not broke. OTOH, I wouldn’t invest it all in highly questionable stuff. Worst case, you have to make do on $25M. So you vacation first class instead of private jet charter…
As for limits on transfers between accounts, etc. No problem. You don’t go online and move stuff, you walk into the bank manager’s office (or the office of concierge banking) and tell them what you want to do. It will happen.
Not quite the same thing, but when I won several thousand dollars on Jeopardy!, they withheld California taxes before they even sent me the check. I had to file a tax return in California that year as well, and I did actually end up getting a refund from California. That was a nice surprise.
Stupid question from a European: The income tax systems I’m familiar with are progressive - the more you earn already, the higher your marginal tax rate on the next additional dollar you’re making. So how would the organisers of the lottery (or a game show, in the Jeopardy example) know which rate they need to apply when they withhold income tax?
The top tax bracket is anything over around $600k. For a gigantic lottery win they can assume the top rate and it’s a rounding error. For anything much lower they must have an internal formula and then when you file at the beginning of the next year you will pay extra or get a refund.
They don’t, there’s a flat rate for withholding and the over or under is handled on the taxpayer’s annual return. (At least for gambling. I dunno what a game show does.)
Surprised by those ACH bank limits. I make ACH transfers in the $10,000 range and more often from my brokerage account. I’ve sent and deposited mid-6 figure amounts for home purchases/sales. The brokerage/bank may change it to a wire transfer in the background opaque to me. The money just moves.
If you hit one of those big payouts, the bank/brokerage will fall all over themselves to accomodate you.
As I say, I ended up getting a tax refund from California for my Jeopardy! winnings, so presumably the rate of withholding that they used was too high. Things like that get figured out at tax time.
I see that there was no winning ticket for last night’s MegaMillions jackpot, so we’re up to 965 million. I’ll wait until it hits an even billion, then buy my ticket. 
Yep.
Lotta folks posting here are used to dealing with small numbers while talking about very big numbers. Life is different when you’re dealing with millions.
e.g. I sure would not expect to use the banking app on my phone to move a million. Unless I had dealt with the bank directly and they were used to me doing that.
Rest assured all those limits are adjustable on a per-customer basis. And start out based on what is normal for somebody with your general level of assets at that bank or brokerage. But they can be changed if you ask.
It’ll take some thought and planning to handle the initial lump sum distribution from the lottery agency. After that it all gets easier.
I think what I’d heard was that the fantastic vacations are considered income, so that even if you get that two week all expenses paid trip to the fantastic all-inclusive resort in Fiji, you still may be on the hook for whatever your tax percentage is of that total.
And most people don’t have say… $2k laying around for the tax on the dream vacation, so they end up taking whatever the cash option is, and just paying Uncle Sam directly out of that, so they at least get something.
That’s where you need that lawyer and a financial management firm/person. They’ll be able to help you set that up in a way that is advantageous to you, and that isn’t risky, etc…
I was in NYC several years ago, and we decided to watch The View being taped live. They typically have minor give-aways - maybe a hundred dollars or two for promotional items like cosmetics, hair dryer, books, toys, etc. on the show. We had received giveaways in this situation maybe 20-plus years ago, but now they wanted everyone to fill out a card with name, address, social security number. Since we were Canadian (show ID to get in), they did not give us a card, so we could not collect the freebies. i assume the “gift” was taxable (like Oprah’s cars) and since they had no way to chase foreigners for the taxes on $100, we were not eligible.
Like most things, there’s a prescribed rate for withholding for certain payouts. For example, in Canada if I withdraw from my RRSP (retirement savings plan) that’s considered taxable income, and generally the fund manager must withhold 25%. It counts as income, and when I do my taxes at year end, I need to include it and then see if it was too much or too little, refund or pay extra.
I assume the IRS has the same guidelines for anyone who hands out money in the USA -if it qualifes, “use the following rate(s)”.