What Is a MYGA? | Rickrode Retirement Strategies

The simplest explanation

MYGA stands for Multi-Year Guaranteed Annuity. You deposit a lump sum with an insurance company, they guarantee you a fixed interest rate for a specific number of years — typically 3, 5, or 7 — and that rate never changes for the duration of the term.

Think of it like a CD from a bank, but issued by an insurance company. MYGAs often offer higher rates than CDs, and unlike a CD, the growth is tax-deferred — meaning you don't owe taxes on the interest until you actually withdraw it.

How the money grows

Let's say you put $100,000 into a 5-year MYGA at 5.40%. Here's exactly what happens year by year:

Year 1$105,400

Year 2$111,092

Year 3$117,091

Year 4$123,414

Year 5$130,080

Example only. Actual rates vary by carrier and term.

No market swings. No rate resets mid-term. You know exactly what you'll have at the end of the term before you sign anything.

Why MYGAs are popular right now

With interest rates elevated over the past few years, MYGA rates have been especially competitive — often 1–2% higher than what you'd find at a bank for the same term. For retirees and near-retirees who want safety and yield, that difference adds up significantly over a 5-year period.

The tax-deferral advantage compounds this further. Inside a MYGA, interest earns interest on the full balance — you're not losing a slice to taxes each year the way you would with a taxable CD.

What to watch for

Surrender charges: MYGAs have a surrender period that matches the term length. If you withdraw more than the free withdrawal amount (usually 10% per year) before the term ends, you'll pay a penalty. Plan to leave the money alone for the full term.

Carrier financial strength: Your guarantee is only as good as the insurance company behind it. We only work with A-rated carriers — companies with strong financial ratings and a long track record of paying claims.

Tax treatment at withdrawal: Growth is tax-deferred, not tax-free. When you withdraw, you'll owe ordinary income tax on the gains. If you're under 59½, there's also a 10% IRS penalty. MYGAs are best held until retirement.

What happens at maturity: When the term ends, you typically have a window to renew, withdraw penalty-free, or roll the money into another product. Missing that window can lock you into a new term at whatever rate the carrier offers.

MYGA vs. CD — what's the difference?

MYGA

Bank CD

Guaranteed rate

✓

Tax-deferred growth

✓

✗

FDIC insured

✗

✓

State guaranty protection

✓

✗

Typically higher rates

✓

✗

Free withdrawal provision

✓ (usually 10%/yr)

Varies

MYGAs are not FDIC insured, but they are backed by state guaranty associations (up to $250,000 in most states) and the financial strength of the issuing carrier.

Who is a MYGA right for?

Anyone who wants a guaranteed return with zero market exposure
People within 5–10 years of retirement looking to protect a portion of their savings
Those with money sitting in a low-yield savings account or CD who want a better rate
Retirees who want predictable, tax-deferred growth without complexity
Anyone who wants to "set it and forget it" for a defined period