Non-Qualified Structured Settlements

Non-Qualified Structured Settlements

Certain kinds of settlements are not eligible for income tax exclusion through a traditional structured settlement annuity. Fortunately, there are other options. A non-qualified structured settlement annuity secures tax-deferred payments for a wide array of cases.

Non-Qualified Assignment

Non-qualified structured settlements refer to settlements that are ineligible for income tax exclusion under Internal Revenue Code Section 104. A non-qualified assignment gives a claimant involved in a non-physical injury case the choice to put all or a portion of their settlement proceeds in a structured settlement. Tax-exempt qualified settlements are usually reserved for cases like personal bodily injury, physical sickness, or wrongful death claims. In a personal bodily injury claim, the plaintiff does not get taxed on the settlement award, no matter if they decide on a structured settlement or a lump sum payment.

The plaintiff loses the most settlement value to taxation with a lump sum payment. In cases not considered bodily injury claims, it may be best to establish a non-qualified structured settlement, also referred to as a non-qualified assignment. A plaintiff can reap the rewards of financial planning through a non-qualified assignment by spreading their settlement out over a long period of time rather than receiving it in a single lump sum (which is taxable). Not only does a non-qualified structured settlement provide the opportunity to receive payments in a way that spreads the tax burden, but taxpayers can plan accordingly each year around the receipt of the additional income because they control the timing of the receipt of income.

With a non-qualified structured settlement, the claimant receives the settlement funds in a series of planned periodic payments, and only is taxed on the funds received in a given tax year. The pre-tax settlement funds can sit and earn interest in the meantime. Some benefits of employing a non-qualified structured settlement annuity include:

  • Creating a long-term, stable source of income
  • Avoiding paying steep taxes on lump sum settlement proceeds
  • Receiving guaranteed payments

Non-Qualified Structured Settlement Claim Types

Different types of claims may be resolved in this manner, including:

  • Contract disputes
  • Construction defects
  • Employment litigation
  • Environmental claims
  • Punitive damages
  • D&O and E&O claims

Market-Based Structured Settlements


A non-qualified structured settlement is only one option- there are other investment options available to claimants of non-physical injury settlements. Jay Scarola can help you decide on the best choice for your situation.

Contact Us Today

Jay Scarola has spent the last two decades helping catastrophically injured clients optimize their settlement proceeds through the long-term financial stability and security of settlement funds. If you are seeking to establish any kind of settlement, you may need a console to maximize financial security. Call Jay Scarola to talk about non-qualified structured settlement services today.

Structured settlements give you peace of mind.

Disclaimer: 1. Guarantees are subject to the claims-paying abilities of the issuing insurance company.