How MYGA Annuities Work
A multi-year guaranteed annuity (MYGA) is a fixed annuity that locks in a guaranteed interest rate for a set number of years, usually between 2 and 10. A MYGA works much like a CD, but with tax-deferred growth and often higher rates. For many savers, MYGAs provide stable, predictable returns without market risk.
What a MYGA Guarantees
Every MYGA contract includes three core guarantees:
- A guaranteed interest rate for the full term
- Principal protection backed by the issuing insurer
- No annual fees on most products
Once the contract begins, the rate does not change. If you buy a 5-year MYGA at 5.40%, you earn 5.40% every year for all five years.
How Interest Is Credited
Interest in a MYGA compounds annually and grows tax-deferred. You don’t owe taxes until you take a withdrawal. Most MYGAs allow you to withdraw the interest each year without penalty if you choose.
Free Withdrawals and Surrender Charges
A MYGA is meant for money you can leave alone during the term. Although your principal is protected, withdrawing more than the free-withdrawal amount can trigger surrender charges.
- Most insurers allow 10% of the account value per year free
- Excess withdrawals may reduce your interest earnings
- Many MYGAs waive charges for nursing home confinement or terminal illness
Why MYGAs Often Pay Higher Rates Than CDs
MYGA rates can be higher than bank CD rates because insurers invest long-term and can offer more competitive yields. MYGAs also grow tax-deferred, which boosts after-tax returns for many savers.
Unlike CDs, MYGAs are backed by insurance companies and protected by state guaranty associations (coverage limits vary by state).
What Happens When the Term Ends
Near the end of the term, the insurer will notify you of your options. Most contracts offer:
- Renewing into a new MYGA term
- Moving funds into another annuity
- Taking a full withdrawal penalty-free
If you do nothing, many MYGAs automatically renew at the insurer’s renewal rate, which may be lower. Reviewing your options before maturity is important.
Who a MYGA Is Best For
A MYGA is a strong fit for savers who want:
- Predictable and stable returns
- Tax-deferred growth
- No stock-market risk
- Better yields than CDs
- A defined timeline of 2–10 years
How MYGAs Compare to Other Fixed Annuities
MYGAs differ from immediate annuities and deferred income annuities (DIAs), which convert a lump sum into guaranteed monthly income. A MYGA is a growth product, not an income contract. It lets your money accumulate at a guaranteed rate without annuitizing.
Next Steps: Compare Today’s MYGA Rates
MYGA rates change frequently and vary by state. You can review current offerings on our live rate page.
View Today’s Fixed Annuity RatesFrequently Asked Questions
Do MYGAs have annual fees?
No. Most MYGAs have no annual policy fees. The insurer earns a spread on its general account investments instead.
Is my principal guaranteed?
Yes. Principal is guaranteed by the issuing insurer and protected by state guaranty associations, up to each state’s coverage limits.
Can I lose money in a MYGA?
You will not lose principal or credited interest if you hold the MYGA to the end of the term and stay within free-withdrawal limits. Losses are only possible if you take large withdrawals during the surrender period and incur surrender charges or tax penalties.
Are MYGA rates negotiable?
No. MYGA rates are set by the insurance company and do not change based on the agent or firm. The same product and rate should be available wherever you purchase it, as long as the agent is appointed with that carrier.