Structured settlements provide a real value as a stable respite from market volatility at all durations for plaintiffs and attorneys. Always check the taxable equivalent yield to easily compare the internal rate of return of a stable structured settlement payment stream or payment streams to a taxable alternative.
Structured settlement payments representing damages for physical injury or physical sickness are income tax-free. This includes any growth in excess of the structured settlement funding amount. While lump sum cash settlements are income tax-free for physical injury and physical cases, if the money is then placed in a traditional investment, then any growth may subject to income taxes.
The taxable equivalent yield chart below helps you quickly and easily compare the yield on a structured settlement to the yield on a taxable investment.
Structured settlements offer significant tax benefits to plaintiffs, especially with today's interest rates!
If your head is getting turned by the return or yield on CD's ,money market funds, or an alternative investment and the alternative investment is taxable, use the net taxable yield chart as a simple way to true up the comparison. For example, 4% taxable income nets out to less than 3%, once your tax bracket gets above 25%. Also consider that CD's and money market funds are not intended to be long term investments. See Historical CD Interest Rates 1984-2023 | Bankrate
IMPORTANT NOTE Should you be contacted by someone trying to buy structured settlement payments from your existing structured settlement for pennies on the dollar, use a rate in existence when the structured settlement was established (i.e., not the rate paid by structured settlement today) to gain a better understand the value of what you actually have. For example, if you're 31 in March 2023 and your structured settlement was established in April 1996 (when you were 5 years old), the structure might have an Internal Rate of Return of 6.8% to more than 7% income tax-free on the original investment. Buyers can only offer you pennies on the dollar. So, you first have to make up what you lost by selling to them and then you have to take on more risk with without the level of certainty you may have with your structured settlement.
Last updated February 6, 2024
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 |
2.0% | 2.35 | 2.44 | 2.78 | 2.90 | 2.99 | 3.08 | 3.23 | 3.33 |
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 |
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 |
1.0% | 0.85 | 0.82 | 0.72 | 0.69 | 0.67 | 0.65 | 0.62 | 0.60 |
1.5% | 1.28 | 1.23 | 1.08 | 1.04 | 1.00 | 0.98 | 0.93 | 0.90 |
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 |
Have a question? Need a settlement problem solver? I'm here to help. Call John Darer at 888-325-8640, or send me a message and I'll be in touch.
4structures.com, LLC
The Structured Settlements and Settlement Planning Company
43 Harbor Drive, #309 Stamford, CT 06902 USA
888-325-8640
646-849-1588
New York City (Manhattan, Bronx, Brooklyn, Queens, Staten Island), Westchester(NY), Nassau County (NY) , Suffolk County on Long Island (NY), Albany County (NY), Oswego County (NY), Steuben County (NY), Broome County (NY), Onondaga County (NY), Fairfield County (CT), New Haven County (CT), Hartford County (CT) New London County (CT), Tolland County (CT), Litchfield (CT), Middlesex (CT) , Bergen County (NJ), Middlesex County (NJ), Ocean County (NJ)
Structured Settlement Experts and Settlement Planning Consultants for settlements from claims or lawsuits arising out of Aviation accidents, Medical Malpractice, settlements involving Serious Personal Injury, Wrongful Death, Wrongful Incarceration, Employment, Civil Rights, Discrimination of any type, Auto accidents, Motorcycle accidents, Maritime accidents, Workers' Compensation, Product Liability, Real Estate Liability, Construction Defect claims or lawsuits, Landlord/Tenant,
Property, Attorney Fee Deferrals, Funding Agreements, Structured Installment Sales, Environmental Liability and Commercial Dispute settlements.
Structured settlements and structured settlement brokerage, settlement planning, Sudden Money®, financial transitionist, funding agreements and insurance related services provided by 4structures.com LLC.
Financial Advisory Services provided through Groove Financial Advisors , LLC, and its service partners.
Fiduciary services, including the custody and administration of trusts provided via service partners.
Securities and Insurance Products are NOT Insured by the FDIC, nor by any other Federal or State Government Agency, are NOT a Deposit of and are NOT Guaranteed by a Bank or any Bank Affiliate, and securities MAY lose value.
4structures (USPTO Reg. 4640532) , 4structures.com (USPTO Reg. 4640531) , We Know Structured Settlements (USPTO Reg. 3089738),
Because Certain Sells (USPTO Reg. 6237309) and We Know Structured Sales (USPTO Reg. 3490489), are Registered Trademarks of 4structures.com LLC.
John Darer is a Registered Trademark of John Darer (USPTO Reg. 4674907)
John Darer California insurance license 0761076
4structures.com LLC CA license OF19785 d/b/a 4structures Settlement Insurance Agency