One of the strongest reason in favor of a structured settlement on large awards is that payments are received income tax free. To be able to easily compare the yield on an income tax free structured settlement payment to the yield on a taxable payment simply refer to the chart below.
Taxable Equivalent Yield Chart
|
TAXABLE EQUIVALENT
YIELD
|
|
Compare the higher taxable interest required to equal income tax-free structured settlement
accumulation at various structured settlement internal rates of return
|
| Tax-Free Rate |
15% taxable |
18% taxable |
28% taxable |
31% taxable |
33% taxable |
35% taxable |
38% taxable |
40% taxable |
|
3.0% |
3.53 |
3.66 |
4.17 |
4.35 |
4.48 |
4.62 |
4.84 |
5.00 |
|
4.0% |
4.71 |
4.88 |
5.56 |
5.80 |
5.97 |
6.15 |
6.45 |
6.67 |
|
5.0% |
5.88 |
6.10 |
6.94 |
7.25 |
7.46 |
7.69 |
8.06 |
8.47 |
|
5.5% |
6.47 |
6.71 |
7.64 |
7.97 |
8.21 |
8.46 |
8.87 |
9.32 |
|
6.0% |
7.06 |
7.32 |
8.33 |
8.70 |
8.96 |
9.23 |
9.68 |
10.17 |
|
6.5% |
7.65 |
7.93 |
9.03 |
9.42 |
9.70 |
10.00 |
10.48 |
11.02 |
|
7.0% |
8.24 |
8.54 |
9.72 |
10.14 |
10.45 |
10.77 |
11.29 |
11.86 |
|
7.5% |
8.82 |
9.15 |
10.42 |
10.87 |
11.19 |
11.54 |
12.10 |
12.71 |
|
8.0% |
9.41 |
9.76 |
11.11 |
11.59 |
11.94 |
12.31 |
12.90 |
13.56 |
|
8.5% |
10.00 |
10.37 |
11.81 |
12.32 |
12.69 |
13.08 |
13.71 |
14.41 |
|
9.0% |
10.59 |
10.98 |
12.50 |
13.04 |
13.43 |
13.85 |
14.52 |
15.25 |
|
9.5% |
11.18 |
11.59 |
13.19 |
13.77 |
14.18 |
14.62 |
15.32 |
16.10 |
|
10% |
11.76 |
12.20 |
13.89 |
14.49 |
14.93 |
15.38 |
16.13 |
16.95 |
|
11% |
12.94 |
13.41 |
15.28 |
15.94 |
16.42 |
16.92 |
17.74 |
18.64 |
|
12% |
14.12 |
14.63 |
16.67 |
17.39 |
17.91 |
18.46 |
19.35 |
20.34 |
| |
|
NET TAXABLE YIELDS
|
|
This table shows the after-tax yields for a given taxable interest rate.
Would you be better off with a structured settlement?
|
| Taxable Rate |
15% taxable |
18% taxable |
28% taxable |
31% taxable |
33% taxable |
35% taxable |
38% taxable |
40% taxable |
|
3.0% |
2.55 |
2.46 |
2.16 |
2.07 |
2.01 |
1.95 |
1.86 |
1.80 |
|
4.0% |
3.40 |
3.28 |
2.88 |
2.76 |
2.68 |
2.60 |
2.48 |
2.40 |
|
5.0% |
4.25 |
4.10 |
3.60 |
3.45 |
3.35 |
3.25 |
3.10 |
2.95 |
|
5.5% |
4.68 |
4.51 |
3.96 |
3.80 |
3.69 |
3.58 |
3.41 |
3.25 |
|
6.0% |
5.10 |
4.92 |
4.32 |
4.14 |
4.02 |
3.90 |
3.72 |
3.54 |
|
6.5% |
5.52 |
5.33 |
4.68 |
4.48 |
4.36 |
4.23 |
4.03 |
3.84 |
|
7.0% |
5.95 |
5.74 |
5.04 |
4.83 |
4.69 |
4.55 |
4.34 |
4.13 |
|
7.5% |
6.38 |
6.15 |
5.40 |
5.18 |
5.02 |
4.88 |
4.65 |
4.43 |
|
8.0% |
6.80 |
6.56 |
5.76 |
5.52 |
5.36 |
5.20 |
4.96 |
4.72 |
|
8.5% |
7.23 |
6.97 |
6.12 |
5.86 |
5.69 |
5.53 |
5.27 |
5.02 |
|
9.0% |
7.65 |
7.38 |
6.48 |
6.21 |
6.03 |
5.85 |
5.58 |
5.31 |
|
9.5% |
8.07 |
7.79 |
6.84 |
6.56 |
6.36 |
6.18 |
5.89 |
5.61 |
|
10% |
8.50 |
8.20 |
7.20 |
6.90 |
6.70 |
6.50 |
6.20 |
5.90 |
|
11% |
9.35 |
9.02 |
7.92 |
7.59 |
7.37 |
7.15 |
6.82 |
6.49 |
|
12% |
10.20 |
9.84 |
8.64 |
8.28 |
8.04 |
7.80 |
7.44 |
7.08 |
|
