What is a Multi-Year Guarantee Annuity?

The Annuity Man

This educational video from Stan The Annuity Man fully explains Multi-Year Guarantee Annuities (MYGAs).

Multi-Year Guarantee Annuities (MYGAs) are the annuity industry's version of a CD (Certificate of Deposit).  Both guarantee a specific annual return percentage for a specific period of time that you choose.  Both have no annual fees.  Both have no moving parts or market attachments.  Both fully protect your principal.

The difference between a Multi-Year Guarantee Annuity (MYGA) and a CD is that in a non-IRA account, the interest in a MYGA grows and compounds tax-deferred.  With a Certificate of Deposit (CD) in a non-IRA (i.e. non-qualified) account, the interest earned is taxed every year at ordinary income rate tax levels.

A MYGA is not better than a CD, and vice versa.  In fact, combining them with laddering strategies makes sense to potentially take advantage of future/potential rising interest rates.  Most MYGA rates that are 3 years in duration or longer are better than CDs in that same time horizon.  Less than 3 year durations, CDs typically offer higher yields than MYGAs.

MYGAs are commodity products and should be shopped with ALL carriers to find the highest contractual yield possible for your specific situation and goals.  Multi-Year Guarantee Annuities are backed by the claims paying ability of the carrier and a State Guaranty Fund up to certain dollar limits.

You can contact Stan if you have any questions or want to see quotes on your specific situation or to see a live feed of the best MYGA fixed rates for your state of residence.


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