The Settlement Alliance

Non-Qualified Settlements

We assist the claimant with developing a plan that maximizes the settlement proceeds while minimizing the tax burden.

Non-Qualified Settlements

Non-qualified settlements are those that do not qualify under IRS guidelines for income tax exclusion. Certain types of non-qualified settlements are eligible for income tax deferral if the proceeds are placed in a structured settlement annuity.

Tax Considerations for Non-Qualified Cases

If a claimant involved in a non-qualified settlement accepts the proceeds in a lump sum, the entire lump sum could be taxed at the highest applicable state and federal income tax rate. It is reasonable to assume that in many cases, a large lump sum could cause a claimant to be in a higher tax bracket.

On the other hand, if a non-qualified settlement is utilized, the claimant can defer the receipt of income by funding the settlement with a structured settlement annuity. This approach could offer a number of possible advantages, including a greater overall payout than a lump sum, avoidance of a higher tax bracket, preservation of tax deductions, and potential avoidance of the alternative minimum tax (AMT).

Flexible Settlement Planning Options

Periodic annuity payments can be designed to meet the claimant’s needs. They provide a stream of guaranteed long-term income, which can be received in a customized payment stream. The claimant can choose whether they want to begin receiving payments immediately or defer them to a later date, and whether those payments will be in the form of lump sums or regular payments over a certain period of time.

Cases That May Benefit From a Non-Qualified Settlement

  • Divorce
  • Employment Disputes
  • Sexual Harassment
  • Wrongful Termination
  • Discrimination
  • Psychological/Emotional Damage
  • Punitive Damages
  • Attorney Fees (including stand-alone)
  • Breach of Confidentiality
  • Breach of Contract
  • Construction Defects
  • Environmental Claims
  • Pre-August 6, 1997 Workers’ Compensation
  • Select other types of claims

The Settlement Alliance team will assist the attorney and the claimant with developing a settlement plan to best suit the claimant’s needs, while minimizing the tax burden as much as possible. Call (855) 284-3876 today to set up an initial consultation.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential