You do not have to choose between a cash (lump-sum payment) or annuity (installment payments) when you place your order. All top prizes are considered installment payments (annuity) unless the winner chooses a lump-sum payment after they've won.
Cash (Lump-Sum Payment)
After you've won, you can choose to receive your portion of the jackpot prize pool all at once. The lump-sum payment amount is the cash value of the jackpot prize on the day of the draw.
Annuity (Installment Payments)
If you prefer annual payments, your portion of the jackpot prize pool will be distributed to you in 30 annual payments. You will receive one payment every year for 30 years.
Why is the Choice Important?
Winners who choose the Annuity option will be taxed on each year's winnings as they receive them. Winners who choose the Cash option will be taxed on the entire amount all at once.
Why Is the Cash Option Jackpot Less Than the Advertised Jackpot?
Pick 6 Lotto jackpots are advertised at the estimated amount of the 30-year annual Installment Payments. With Installment Payments, the first annual payment is approximately 1/30th of the estimated jackpot amount. For the remaining 29 years, the New Jersey Lottery buys Government Security or Insurance Bonds, which earn interest annually. That annual return, plus the original prize pool, makes up the entire annuity prize. Winners who choose the Cash option do not receive the interest generated by the 29-year investments.
Jackpot Payment Example*
If the New Jersey Lottery estimates a jackpot of $11 million, the approximate Lump-Sum cash value is $4.6 million. With the Lump-Sum Payment, the winner may receive the $4.6 million in one payment, less the required 28% federal tax withholdings. With the Installment Payments, the winner receives $11 million over a 30-year period, less the required 28% federal tax withholdings.
* Dollar amounts are based on payments to a single jackpot winner, sales, and fluctuating interest rates.