What Is a MYGA Multi-Year Guaranteed Annuity Guide (2025)

A Clear Breakdown of How MYGAs Work, Who They’re For, and What You Can Expect from a $100,000 Investment

What Is a MYGA?

A MYGA (Multi-Year Guaranteed Annuity) is a type of Fixed Annuity that offers a guaranteed interest rate for a specific period — typically 3 to 10 years. It’s designed for people who want safe, predictable growth without the risks of the stock market.

Think of a MYGA as a CD alternative issued by an insurance company — but with tax-deferred growth, potentially higher rates, and more flexible options.

How Does a MYGA Work?

Here’s what happens when you purchase a MYGA:

You deposit a lump sum (e.g. $50,000 or more).
The insurer offers a fixed interest rate for a chosen term (like 3, 5, or 7 years).
Your money grows tax-deferred. Meaning you don’t owe taxes on interest until you withdraw.
When the term ends, you can:
1. Renew with the same or a new company
2. Roll over into another annuity
3. Begin income payments
4. Withdraw your funds

Many MYGAs also allow penalty-free access to a portion of your money each year — typically up to 10%.

Example: What Happens If You Put $100,000 in a MYGA?

Let’s say you invest $100,000 into a 5-year MYGA.

Here’s what happens:

Your principal is protected — it can’t go down.
You lock in a fixed rate (e.g., 5%) for 5 years.
You don’t pay taxes on the interest each year — growth is tax-deferred.
You can usually access up to $10,000 per year (10%) penalty-free if needed.

After 5 years, your account has grown steadily, safely, and tax-deferred. You now have options: renew, take income, or withdraw all funds — with no penalties.

This is a great strategy for retirees, conservative investors, or anyone who wants to park $100,000 somewhere stable with reliable, tax-smart growth.

How to Find the Best MYGA Rates

MYGA rates vary depending on:

Your state of residence
Your age
The investment amount
The term length you select

Instead of relying on outdated published rates, use a live quoting tool to compare top-rated carriers instantly.

Use Our MYGA Calculator to Compare Real-Time Rates

MYGA vs. CD: Which Is Better?

Both MYGAs and CDs are used to preserve principal and earn guaranteed interest — but they differ in key ways.

MYGA (Multi-Year Guaranteed Annuity)

Issued by an insurance company
Growth is tax-deferred (you pay tax only when you withdraw)
Typically offers higher interest rates than CDs
Often allows 10% penalty-free withdrawals annually
Regulated and backed by state guaranty associations

CD (Certificate of Deposit)

Issued by a bank or credit union
Interest is taxed annually, even if reinvested
Lower rates on longer terms
Early withdrawal = penalty on interest
FDIC-insured up to $250,000 per account

Bottom line: MYGAs often provide better after-tax growth and more flexibility for retirement-focused investors.

Pros and Cons of MYGAs

Pros:

Fixed, predictable growth
No exposure to stock market losses
Tax-deferred interest accumulation
Higher yields than most CDs or savings
Simple structure, ideal for conservative investors

Cons:

Limited liquidity beyond the free withdrawal allowance
Gains are taxed as income when withdrawn
Early withdrawals above limits may incur surrender charges

Who Should Consider a MYGA?

A MYGA may be ideal for:

Retirees or near-retirees seeking guaranteed income
CD or bond investors looking for stronger yields
Anyone with idle cash or a recent rollover
Those needing principal protection with growth
People building a laddered income plan

MYGA Laddering Strategy

If you want consistent returns but some flexibility, laddering MYGAs can help.

Instead of locking up all your money for 5–7 years, you split your investment across multiple terms.

Example:

$33K into a 3-year MYGA
$33K into a 5-year MYGA
$34K into a 7-year MYGA

This way, one contract matures every few years, letting you reinvest, take income, or reallocate based on market conditions.

How Are MYGAs Taxed?

Non-Qualified Funds (cash, savings, brokerage):

Interest grows tax-deferred
You pay taxes only when you withdraw interest
Your principal is not taxed again

Qualified Funds (IRA, Roth IRA):

MYGA follows the tax rules of the account
Traditional IRA: taxed on withdrawal
Roth IRA: tax-free growth and withdrawals (if qualified)

Before 59½?
You may owe a 10% IRS penalty on gains unless using a qualified exception.

How to Buy a MYGA in 3 Steps

1. Get a Quote

Use our MYGA calculator to see live rate offers based on your age, state, and investment amount.

2. Choose Your Term & Features

Pick from a variety of top-rated insurance carriers offering 3–10 year terms, with optional features like penalty-free access or payout options.

3. Submit Your Application

Work with a licensed advisor. Once your contract is issued and funded, your money goes to work.

Frequently Asked Questions (FAQs)

Are MYGAs safe?

Yes. MYGAs are regulated by state insurance departments and backed by the financial strength of the issuing insurer. Most states offer guaranty association protection, typically up to $250,000 per insurer per owner.