ARE STRUCTURED SETTLEMENTS TAX-FREE OR TAX-DEFERRED?
• A properly designed structured settlement is tax-free under Internal Revenue Code Section 104(a)(2), which states, Gross income does not include. The amount of any damages received (whether as lump sums or as periodic payments) on account of personal injuries or sickness;. All income derived from the settlement is tax-free, regardless of any other sources of income available to you. • Under Internal Revenue and State tax laws, all proceeds from a structured settlement are 100% free of all income taxes. In addition, if you should die prior to all the guaranteed payments being made, those remaining payments are also paid tax-free to your beneficiary. • A cash settlement would be tax-free, however you would then pay taxes on the earnings you receive from the bank or other investments. The rate of return from a structured settlement is not only tax-free but higher than alternative investments. 6. WHERE IS THE SETTLEMENT INVESTED? IS IT SAFE? • Settlement annuities are purchased from only
