What Our Non-Qualified Assignment Consultants Can Do for You

What Our Non-Qualified Assignment Consultants Can Do for You

A non-qualified assignment (NQA) is an assignment of an obligation to pay money in the future. It is used to plan structured settlement payment schedules, and only for litigation types that would consider the settlement earnings as taxable.

Tax-exempt qualified settlements are reserved for cases such as wrongful death, personal bodily injury, or physical sickness claims. In a personal bodily injury claim, the plaintiff will not get taxed on their awarded income regardless of whether they accept a lump sum payment or if they opt for a structured settlement. Cases that do not involve personal bodily injury, however, will get heavily taxed by the government, especially if the plaintiff opts for the lump sum payment. Selecting the lump sum payment would cause the plaintiff to receive the largest taxation on their settlement value. However, it would be beneficial to opt for a non-qualified structured settlement, also known as a non-qualified assignment, in cases that are not considered bodily injury claims. The types of cases in which a non-qualified assignment can be used include claims or lawsuits pertaining to employment, matrimonial litigation, sexual harassment, breach of contract, and other cases involving taxable damages or payouts. 

When a plaintiff spreads out the payments from a settlement, they can avoid the heavy taxation that accompanies a lump sum payment. One can also avoid losing various government benefits due to a sudden increase in income, and NQAs provide more flexibility for investing settlement monies. 

There are numerous benefits to setting up a non-qualified structured settlement:

Tax Deferral 

  • This is the primary benefit associated with establishing an NQA. Plaintiffs can effectively put off the taxation of earnings until a later date, so they will not be taxed as heavily. 

Interest Earned on Pre-Tax Earnings 

  • While avoiding taxation in the interim, one can still earn interest on the untaxed value of each settlement payment—this means more interest accrued over a longer period of time until the point of taxation. 

Future Planning 

  • A non-qualified assignment allows a plaintiff extreme flexibility in how they receive their earnings over time. They can choose to spread them out over a short period or over many decades and into retirement. 

If your clients require assistance establishing an NQA payment plan that works for their specific needs, our non-qualified structured settlement planners can help create a plan that truly works for them. Contact our NQA consultants today.