This Volunteer Couple Have $6.8 Million To Spend. But Why Did They Start Off With $9.1 Million?

The Mallens show their $9.1 Million Pick-6 check.

A couple who have been volunteering the last year for a New Jersey organisation which rescues stray feral cats won't stop working there after their $9.1 Million win.

Bob and Karen Mallen chose the cash value of $6.8 million in a recent New Jersey Pick-6 Lottery drawing. I'll explain why they selected this option in a minute.

The couple plan to continue their volunteer work.

"We've been volunteering at The Crooked Tail in Sea Isle for about a year," Karen Mallen said. "Even though we're not cat people – we're dog people."

The Crooked Tail store in Sea Isle, New Jersey

Bob Mallen said he and his wife appreciate the mission of the non-profit organization and believe the goal is worthwhile, according to the Shore News.

"They capture stray cats, spay and neuter them, take care of the vet bills, and then they foster the strays till they can find a home," Bob said.

 
About a month ago, the couple bought three lottery tickets at the Acme on South Dennis Road. According to Bob Mallen, he normally buys two tickets on a trip to the store, but a previous win of $3 convinced him to buy one more.

The Acme store in North Cape.

It was that last ticket that had the winning numbers, he said, and the Mallens found themselves the winners of $9.1 million – if they'd chosen the annuity over the cash value.

Many games offer two payout options for their prizes. The larger one is the most advertised for obvious reasons - it sells more tickets.

The jackpot amount is reduced if winners take the popular cash option instead of the full amount.

There are two reasons why the prize total is different:

1. CASH SUM VS ANNUITY 

Most USA games show an annuity payout in their jackpot figures. That's the total amount the organizers pay the winners over an extended period in installments spread over 20 or 25 years, making up the large jackpot totals you see in many games.

If the winner takes a cash sum, this amount is reduced considerably.

For example, for the $640 million Mega Millions game drawn 30 March 2012, the cash lump sum payout was $474 million.

And this amount is before tax. There are several taxes that are withdrawn from the winning amount as well, bringing down the total to as little as 50% of the advertised amount.

2. TAXES 

In the USA, all lottery winnings are subject to Federal and some local taxes. The IRS takes a 25% withholding tax from any wins over $5,000.

But of course large winners find themselves in a higher tax bracket too, so this tax amount can rise substantially.

In Europe jackpots are usually tax-free, and the jackpots are paid in a lump sum so there's little worry there - all the costs are taken out and the advertised jackpot is the final amount.

So if you are a winner in the USA like the Mallens, what should you do to get the most value from your win?

Like them, go for the cash advance. Even though it's a lower amount , there is a definite advantage on having the money in your bank as a final figure. It allows many people to pay off their debts and make large purchases such as houses.