All is Not What Seems. Rate Only Applies to Small Balance

A Modern Day "Toaster" Incentive

"Why structure when you can get X% on a money market account" blurted the financial adviser to his client. While barely lifting a finger to research the seemingly outlandish claim I found that indeed it is true that you can get X% on a money market account from one entity. But, if you read the fine print, it only applies to balances up to $2,000 .  Say the teaser is 4%. The value is only $80, less any applicable Federal, state and local taxes on the interest income. It's no more than a modern day "toaster incentive". A long time ago, banks used to give away toasters if you opened up a savings account with a certain balance.

The Tax Exempt Boost with Structured Settlements

On the other hand with a structured settlement, you can allocate much more than $2,000 from a settlement and get a tax exempt rate that is better than money markets, CDs and many other income producing investments, if your structured settlement payment represent damages on account of personal physical injury, physical sickness, wrongful death [exempt under  IRC 104(a)(2)], or workers compensation claims  [exempt under IRC 104(a)(1). If you were wrongfully incarcerated and expecting a recovery, there may also be a tax exemption subject to IRC 139F.

Structured Settlements | Tax Benefits of Structured Settlements 2024(4structures.com)

Structured Settlements in Wrongful Incarceration/ Wrongful Imprisonment(4structures.com)

Last updated October 19, 2024

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