Kick the Tax Can Forever With MYGAs

If you do not want market risk, want a fair fixed rate, and want to delay taxes for as long as legally possible, you need to understand how MYGAs work. A Multi-Year Guarantee Annuity is the annuity industry’s version of a CD, fixed rate, no moving parts, no market attachment.

The difference is not the rate. The difference is how taxes are handled when MYGAs are used correctly in non-IRA accounts.

Key Takeaways

MYGAs are fixed-rate annuities similar to CDs
Interest can compound tax deferred in non-qualified accounts
Taxes are not triggered during IRS-approved 1035 transfers
You can roll MYGAs repeatedly without paying taxes on interest
Principal protection and tax deferral can work together

What Is a MYGA?

A Multi-Year Guarantee Annuity is a fixed-rate insurance contract. You lock in a guaranteed interest rate for a specific period, typically one to ten years.

There are no indexes, no caps, and no market exposure. The insurance company guarantees the rate for the chosen duration.

MYGAs vs CDs in Non-Qualified Accounts

With CDs held in non-qualified accounts, interest is taxed each year, even if you do not touch the money.

With MYGAs held in non-qualified accounts, interest grows tax deferred. You do not owe taxes until money is withdrawn or the contract is surrendered.

That difference alone changes long-term outcomes.

How Tax Deferral Works With MYGAs

When a MYGA reaches the end of its term, you have options. You can take the money, transfer it, or roll it into another MYGA.

If you roll it using an IRS-approved 1035 exchange, the transfer is not a taxable event. Your cost basis moves with the money, and the interest continues to compound tax deferred.

Rolling MYGAs Again and Again

This is where the phrase “kick the tax can down the road” comes from.

You can roll from one MYGA to another repeatedly, five years at a time or however long the terms are, without paying taxes on the accumulated interest. This can continue for decades if you choose.

It is not a loophole. It is the law.

Liquidity and Access to Funds

Most MYGAs offer liquidity provisions. Some allow annual withdrawals, some allow interest-only withdrawals, and some allow a percentage such as ten percent per year.

If you withdraw money, gains come out first and are taxed as ordinary income. You do not have to take withdrawals, but the option is typically there.

Principal Protection and Legacy Planning

MYGAs protect principal. There is no market risk.

They can also work as a legacy strategy. If the owner dies, the contract value goes to beneficiaries. The money does not disappear.

Why Tax Deferral Is Unlikely to Go Away

Tax deferral on annuities has been in place for decades. It is deeply embedded in the insurance and retirement system.

While tax rules can change, the ability to defer taxes through annuities has remained intact across political cycles.

Final Thoughts on Kicking the Tax Can With MYGAs

MYGAs are not exciting. They are not supposed to be.

They are designed for people who want certainty, principal protection, and the ability to defer taxes legally for as long as possible. When used correctly, they allow interest to compound without annual tax drag.

If you want to compare current MYGA rates in your state or see how rolling MYGAs could fit into your tax-deferred strategy, you can run live quotes or schedule a conversation with The Annuity Man team.