Lotto Winner Takes Lump Sum-Did He Do The Right Thing?

An out-of-work San Francisco Bay Area man and his wife, came forward Friday to claim a $33 million California SuperLotto Plus jackpot.

According to the California Lottery Massoud Ardalan loves pumpkin seeds, and they aren’t easy to find. So when he found them at Heather Farm Shell, he made that his regular stop for pumpkin seeds, gas, and his Lottery tickets. However on Wednesday, he only had $15 – $10 for gas and $5 for Lottery tickets – which meant no money for pumpkin seeds. The trade-off worked out well, because the fifth line of his Lottery numbers were the ones that counted – they won him a $33 million SuperLotto Plus jackpot. Ardalan and his wife of 25 years, Homeira, came forward last week to claim their multi-million dollar prize. The prize is estimated to come to about $23 million once it is cashed out according to lottery officials.

Ardalan, a reprographics manager by trade, was having a regular day on Thursday, dropping Homeira off at work and then going to look for work himself. Ardalan was laid off in November after being with the same company for 16 years. Once he got home, he had a message from a friend telling him that someone in Walnut Creek had won the $33 million SuperLotto Plus jackpot and that he should check his tickets. He did. He couldn’t believe his eyes…all six numbers matched! He went back to see his wife at the salon where she works as a hairdresser and asked her to come outside, he had something to tell her: “We won the Lottery,” he said. Even as they recounted the story, Homeira’s eyes sparkled and she giggled, “I didn’t believe him.”

Ardalan plans to start his own business, possibly in reprographics, and put his friends and family who are out of work, back to work. He also may buy some rental properties and a salon for his wife to run. Ardalan explained through laughter, “That’s a lot of money, we can do a lot of things, buy a lot of pumpkin seeds! Maybe buy a pumpkin seed factory!”
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In my opinion it was correct for them to take the jackpot in lump sum. The $33 Million jackpot is paid over 26 years in California which would give them almost $1.27 million a year. With current Federal income tax rates approaching 40%, I think its safe to say those tax rates will not go down, and may increase over the next 25 years. With a payout that pushes the yearly winnings into the top tax bracket, you are far better off taking a one time tax hit on the $23 Million lump sum, then investing it where the earnings are taxed at the lower capital gains tax rate for long-term investments.