Annuities
MYGAs vs. CDs
Safe Money Strategy
MYGAs vs CDs
Same Safety. Higher Yield. Better Tax Treatment.
If you have money sitting in a bank CD earning 3.5%–4%, there's a good chance you're leaving real money on the table. A Multi-Year Guaranteed Annuity — or MYGA — offers the same principal protection and fixed-rate guarantee as a CD, but typically pays significantly more and grows tax-deferred.
Get Current MYGA Rates
*Rates as of 2026. Rates vary by carrier, term, and deposit amount.
Feature by Feature
MYGA vs. CD: The Full Comparison
Both protect your principal. Both pay a guaranteed fixed rate. But on nearly every other dimension, MYGAs come out ahead for retirement-focused savers.
| Feature | 🏦 CD (Bank) | ✦ MYGA (Annuity) |
|---|---|---|
| Typical 5-Year Rate* | 3.50% – 4.40% | 5.00% – 6.45% Higher |
| Tax Treatment on Growth | ✕ Taxed annually — even if you don't withdraw | ✓ Tax-deferred — you pay only when you withdraw it Advantage |
| Principal Protection | ✓ Yes — FDIC insured up to $250k | ✓ Yes — carrier guarantee + state guaranty association Equal |
| Rate Lock | Fixed for term (typically 1–5 yrs) | Fixed for full term (typically 2–10 yrs) Longer |
| Annual Free Withdrawals | ✕ Usually none without penalty | ✓ Most contracts allow 10% per year More Flexible |
| Early Withdrawal Penalty | Bank penalty (typically 3–6 months interest) | Surrender charge schedule (varies by carrier) Review Terms |
| Early IRS Penalty (pre-59½) | ✓ None (unless inside a retirement account) | ✕ 10% IRS penalty on earnings CD Wins Here |
| Rollover / Renewal Options | Renew at current (potentially lower) rates | 1035 exchange to other annuities, tax-free More Options |
| Convert to Lifetime Income | ✕ Not available | ✓ Can annuitize for guaranteed income for life Unique Benefit |
| Best For | Short-term savings, funds needed within 1–2 years, FDIC coverage a priority | Retirement savings aged 50+, tax-sensitive accounts, 3–10 year timeline Retirement Focus |
*Rates as of 2026 and vary by carrier, term, and deposit amount. Not a guarantee of future performance.
The Biggest Hidden Advantage
CD Interest Is Taxed Every Year — MYGA Interest Isn't
This is the most important difference most people overlook. With a CD, the IRS taxes your interest as ordinary income every single year — even if you never touched the money. With a MYGA, that same growth compounds without an annual tax drag until you decide to withdraw. Over 5 years, that difference in compounding can add up to thousands of dollars.
Certificate of Deposit
$100,000 at 4.40% for 5 Years
Gross interest earned$24,082
Annual tax drag (22% bracket)–$1,060/yr
Lost compounding on taxes paid–$1,420
Approx. after-tax total~$119,300
Interest taxed each year reduces the base available to compound in subsequent years.
Multi-Year Guaranteed Annuity
$100,000 at 6.45% for 5 Years
Gross interest earned$36,470
Annual tax drag during term$0
Full compounding on all gains+$36,470
Value before withdrawal tax~$136,470
Growth compounds fully tax-deferred. Tax is owed only when you actually withdraw funds.
$9,000+
That's the approximate after-tax advantage a MYGA can produce over a CD on a $100,000 deposit over 5 years — combining the higher rate with the compounding benefit of tax deferral. The gap grows even larger in higher tax brackets.
Understanding the Product
What Is a MYGA and How Does It Work?
A Multi-Year Guaranteed Annuity (MYGA) is an insurance product that works a lot like a CD — you deposit a lump sum, the carrier locks in a guaranteed interest rate for a fixed term, and your principal is protected. The key differences are the rate, the tax treatment, and what you can do with the money at the end.
Step 01
Deposit a Lump Sum
Minimum deposits typically start at $10,000. The more you deposit, the better the rate you can access from top-rated carriers.
Step 02
Lock In Your Rate
The carrier guarantees a fixed interest rate for your chosen term — typically 3, 5, 7, or 10 years. That rate is locked in for the full term, regardless of what interest rates do afterward.
Step 03
Grow Tax-Deferred
Your balance grows without annual taxation. No 1099 at the end of each year — your interest compounds in full until you choose to withdraw.
Step 04
Access or Reposition
At maturity, withdraw with no surrender charges, renew at current rates, or do a 1035 exchange into another annuity — all tax-free. You can also annuitize for guaranteed lifetime income.
Principal Is 100% Protected
Your original deposit cannot lose value. Backed by the claims-paying ability of the insurer and covered by state guaranty associations, typically up to $250,000.
Terms from 3 to 10 Years
Longer terms generally offer higher rates. You can also ladder across multiple terms so a portion of your money becomes available every few years.
10% Annual Free Withdrawal
Most MYGA contracts allow you to withdraw up to 10% of your account value each year without triggering surrender charges — unlike most CDs which penalize any early withdrawal.
1035 Exchange — Tax-Free Rollover
At maturity, you can roll your MYGA into another annuity product using a 1035 exchange without triggering a taxable event — an option CDs simply don't have.
Convert to Lifetime Income
When you're ready, a MYGA can be annuitized — turned into a guaranteed income stream you cannot outlive. No CD can make that offer.
Shop Across Dozens of Carriers
Unlike a CD tied to one bank, MYGAs can be compared across 90+ carriers to find the best rate for your term, deposit size, and risk tolerance.
Is a MYGA Right for You?
MYGAs Work Best in the Right Situation
A MYGA isn't for every dollar or every person. But for the right situation — money you don't need immediate access to, held by someone 50 or older who wants safety and a better return than their bank is offering — a MYGA often makes more sense than a CD.
A MYGA likely makes sense if…
You're a Strong Candidate
- You're age 50 or older and within 5–15 years of retirement
- You have money sitting in a bank CD earning under 4%
- You want principal protection with no market exposure
- You're in a higher tax bracket and want to defer income recognition
- You have a 3–10 year window before you need to access the funds
- You want the option to convert savings into guaranteed lifetime income
- You're laddering safe-money assets across multiple terms
A CD may be better if…
Situations Where a CD Wins
- You need the money within 12–24 months
- You're under age 59½ and may need penalty-free early access
- FDIC insurance coverage is your top priority
- Your deposit is under $10,000 (below most MYGA minimums)
- You want the simplicity of a bank product with no insurance contract
- You anticipate needing full liquidity on short notice
One thing to always check: Early withdrawal from a MYGA before age 59½ triggers a 10% IRS penalty on earnings — the same as any tax-deferred retirement account. MYGAs are best suited to money you intend to hold until or through retirement. A licensed advisor can help you determine how a MYGA fits within your overall plan.
See Current Rates
Schedule Your Free MYGA Review
Find Out What Your Money Could Be Earning
If you have money sitting in a bank CD, savings account, or money market that you won't need for 3–10 years, a MYGA may offer significantly better returns with the same level of safety. Let's run the numbers for your situation.
✓ Current rates from top-rated carriers
✓ No obligation, no pressure
✓ Compare terms: 3, 5, 7, and 10 years
✓ Side-by-side after-tax comparison
✓ Principal always protected
✓ Free 30-minute strategy call
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