A multi-year guaranteed annuity, often called a MYGA, is a fixed annuity that credits a stated interest rate for a set number of years. It can appeal to people who want more predictability than a market-based account and who are comfortable committing part of their money for a defined period.

How a MYGA works

You place money with an insurance company. In return, the contract credits a fixed rate for the guarantee period, subject to the terms of the annuity. At the end of that period, you may have renewal, withdrawal, transfer, or income options depending on the contract.

The important point is that a MYGA is an insurance contract, not a bank CD. Guarantees are backed by the claims-paying ability of the issuing insurer, and contract terms can vary from one carrier to another.

The tradeoffs to compare

The headline rate matters, but it is not the only detail. A useful comparison also looks at the surrender period, how much money can be accessed without a surrender charge, what happens at renewal, whether the contract includes market value adjustment provisions, and how the money fits into the rest of your retirement plan.

Taxes matter too. Interest inside a nonqualified annuity is generally tax-deferred until withdrawn, but the tax treatment of distributions depends on the contract and your circumstances. King Life does not provide tax advice, so tax questions should be coordinated with your tax professional.

Who may want to compare a MYGA?

A MYGA may be worth reviewing if you value a known rate, want to reduce exposure to market volatility for a portion of your assets, and do not expect to need full liquidity during the guarantee period. It may be a poor fit if you may need the money soon, if surrender flexibility is especially important, or if another structure better matches your income and legacy goals.

A better way to compare

Instead of asking only, “What is today’s rate?” ask: How long is the guarantee? What can I access? What happens at the end? What is guaranteed by the contract? How does this fit with the rest of my retirement income plan?

King Life helps clients compare MYGAs alongside other retirement strategies so the decision is based on the whole picture. Explore retirement planning or request a no-cost retirement review.