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    Types of Annuities

    MYGAs (Multi-Year Guaranteed Annuities) Explained

    A MYGA is an insurance contract that credits a fixed interest rate for a set number of years — commonly 3, 5, 7, or 10. The rate is guaranteed by the issuing insurance company, and withdrawals above the free amount during the term are subject to surrender charges.

    A desk with contract paperwork and reading glasses
    A MYGA credits a fixed rate for a set term, backed by the claims-paying ability of the issuing insurance company.

    What Is a MYGA?

    A Multi-Year Guaranteed Annuity is a fixed annuity that credits a specific interest rate for a multi-year term — commonly 3, 5, 7, or 10 years. The rate is set in the contract and does not change during the term. It is guaranteed by the insurance company that issues it, not by a bank or a government agency.

    MYGAs and CDs are not the same thing

    Both credit a fixed rate over a fixed term, which is why people compare them. The differences underneath that similarity are material, and they run in both directions.

    Bank CDMYGA
    What backs itFDIC insured, generally up to $250,000 per depositor, per bank, per ownership categoryNot FDIC insured. Backed by the claims-paying ability of the issuing insurance company, with limited state guaranty association coverage that varies by state
    Taxes on growthInterest is generally taxable in the year it is creditedGrowth is tax-deferred until withdrawn, then taxed as ordinary income. Withdrawals before age 59½ may also incur a 10% federal penalty
    Getting your money outEarly withdrawal penalty, typically a set number of months of interestSurrender charges apply above the contract's free withdrawal amount, and a market value adjustment may also apply
    Term lengthMonths to several yearsCommonly 3 to 10 years

    Whether tax deferral is an advantage depends on your tax situation now versus when you withdraw, and on whether you will need access to the money during the term. It is not automatically better.

    Why some retirees consider MYGAs

    The rate is fixed and stated in the contract, so the value at the end of the term is knowable in advance. For someone who wants a defined outcome over a defined period and does not need liquidity in the meantime, that predictability is the point.

    What to look at before you buy

    Surrender charges typically apply to withdrawals above a free amount during the term, and the schedule varies by contract. Because the guarantee depends on the insurer, the financial strength rating of the issuing carrier matters — check where any rating sits within that agency's scale rather than treating a letter grade on its own as meaningful. State guaranty association coverage exists but is capped and differs by state.

    Who they may fit

    Someone who wants a defined rate over a defined term, is comfortable leaving the money untouched for that period, and understands that the guarantee rests on the issuing insurer. Whether a MYGA fits your situation depends on your income needs, tax position, and time horizon — a licensed professional can walk through the specifics with you.

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