What Is a MYGA? Multi-Year Guaranteed Annuities Explained
MYGAs are the annuity industry's answer to bank CDs — usually with significantly higher rates. Here's how they work and what to watch for.
Key Takeaways
- 1A MYGA is a fixed annuity with a guaranteed interest rate for a set number of years.
- 2Top MYGAs in 2025 are paying 5–9%, vs. 4–5% on top CDs.
- 3Earnings grow tax-deferred until withdrawal.
- 4Surrender periods (3–10 years) limit early access without penalty.
MYGA basics
A Multi-Year Guaranteed Annuity (MYGA) locks in a fixed interest rate for a contracted term — typically 3, 5, 7, or 10 years. Your principal is fully protected and growth is guaranteed.
Think of it as a CD on steroids — same kind of guaranteed return, often higher rates, with the trade-off of a longer commitment.
Tax advantages over CDs
CD interest is taxed annually, even if you don't withdraw it. MYGA earnings are tax-deferred — you only pay tax when you take a withdrawal.
Over 5–10 years, this compounding-without-tax-drag advantage often outweighs the rate difference itself.
What to watch for
Surrender penalties: withdrawing more than 10% per year (typically) before the surrender period ends triggers steep fees.
Carrier strength: only buy from A-rated carriers backed by your state's guaranty association.
Rate renewal vs. rate drop: at term end, you can withdraw, renew at current rates, or convert to lifetime income.
Related: See today's MYGA rates →
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