MYGAs: a fixed rate for a set term.
A multi-year guaranteed annuity locks a fixed rate for a set number of years, often compared to a bank CD, though with real differences worth understanding.
What a MYGA is
A MYGA is a fixed annuity that guarantees a set interest rate for a defined number of years. It's designed for money you won't need during that term, and its growth is generally tax-deferred until you withdraw it.
MYGA vs CD
A MYGA and a CD can look similar, since both lock in a fixed rate for a term. But they're different products. A CD is a bank deposit, backed by FDIC insurance, and the interest is usually taxed every year. A MYGA is an insurance contract. Its guarantee rests on the carrier, not the FDIC, and growth is usually tax-deferred.
Neither is universally better. If FDIC insurance and simple annual access matter most, a CD may fit. If tax-deferred growth over a defined term matters and you won't need the money in the meantime, a MYGA may fit.
Access and terms
Like other annuities, MYGAs have surrender charges during the term, and limited free withdrawals may apply. The money you commit should be money you won't need during the term.
Who it may fit, and who it may not
May fit someone who
- Wants a predictable fixed rate for a set period.
- Values tax-deferral.
- Doesn't need that money in the meantime.
May not fit someone who
- Wants FDIC protection specifically.
- Needs full liquidity.
- Wants growth potential beyond a fixed rate.
Review Your Retirement Income Options
Educational only. A MYGA is an annuity, not a bank product, and is not FDIC-insured. Guarantees are subject to the claims-paying ability of the issuing carrier. Surrender charges apply during the term; withdrawals before age 59½ may incur an additional tax penalty. Tax treatment varies; consult a qualified tax professional. NOI does not provide tax, legal, or investment advice.