Personal Finance

Mega Millions jackpot climbs to $530 million. If you win, here's what to do first

Key Points
  • The jackpot for Friday night's drawing marks the seventh-largest in the game's history.
  • The reduced cash option is  $343.9 million.
  • Experts recommend that big lottery winners get guidance from experienced professionals before heading over to lottery headquarters to claim their prize.

The Mega Millions jackpot has climbed higher yet again.

With no ticket matching all six numbers in Tuesday night's drawing, the top prize is now $530 million. It marks the seventh-largest jackpot in the game's history.

Meanwhile, a North Carolina man came forward on Tuesday to claim the $344.6 million Powerball jackpot that he won in last Saturday night's drawing. Charles Jackson, a 66-year-old resident of the Tar Heel State, chose to take the lump sum of $223.3 million ($158 million after tax withholdings).

If you are fortunate enough to win big in Friday night's Mega Millions drawing, here are some things that experts recommend doing right off the bat to protect your windfall.

1. Chill

While you might be eager to claim your winnings, experts say it's best not to rush over to lottery headquarters the day you discover you've become one of the wealthiest people in the country.

Winners get anywhere from three or six months to a year to claim their prize, depending on where the winning ticket was purchased.

Experts recommended using as much time as you need to prepare to claim your winnings. That should include assembling a team of experienced professionals: an attorney, financial planner, tax advisor and insurance agent.

"The time between the day you win the lottery and the day you claim is your last period of normalcy," said Jason Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York.

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2. Protect your ticket

The standard advice from experts is to sign the back of the winning ticket so that if you are separated from it, your signature can help ensure you still get the prize.

However, signing it could interfere with your ability to shield your identity from the public, depending on where you bought it.

A handful of states let you claim anonymously, while others require the winner's name to be announced. Others will allow a trust or other legal entity to claim the prize on your behalf, thereby keeping your name out of the public eye.

3. Keep quiet

Your first urge might be to share your exciting news with, well, the world. However, the fewer people who know, the better. This is the case even if you are able to claim your prize anonymously.

"Obviously it may be impossible to keep this from immediate family, but news like this travels quickly," said Kurland, who specializes in helping lottery winners. "Try to keep the circle of people who know as small as possible."

If you won't be able to dodge publicity due to state law, consider changing your phone number or living somewhere else temporarily to avoid media attention and sudden money requests from long-lost friends or relatives.

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4. Weigh the payment options

Jackpot winners get to decide between taking an immediate, reduced lump sum or spreading out their winnings over three decades. Either way, the IRS will take 24% before the money reaches you.

For the $530 million Mega Millions jackpot, the cash option is $343.9 million. The 24% federal withholding would reduce that by about $82.5 million, to $261.4 million. However, because the top marginal tax rate is 37%, the winner should anticipate owing more to Uncle Sam at tax time.

Additionally, state taxes typically are withheld or due, depending on where you live and where the ticket was purchased.

5. Take a deep breath

Before spending a dime, think about what your sudden wealth means. Not just financially, but emotionally.

Instead of giving in to the temptation to buy big-ticket items right off the bat, give yourself time to process the magnitude of your win.

This is often when winners begin to think about their legacy and what societal contributions they want to make. Some even set up their own charitable organizations.

How the Mega Millions and Powerball lotteries work