Home › Annuities › What Is a MYGA?

Guide Author: Hans Goldstein, CA lic. #4273294, NPN 20602398 Updated: October 5, 2026

What Is a MYGA? The Multi-Year Guaranteed Annuity, Explained

Written by Hans Goldstein, independent licensed insurance producer · CA lic. #4273294 · NPN 20602398
Last updated October 5, 2026

Short answer: a MYGA (multi-year guaranteed annuity) is a fixed annuity from an insurance company that pays one guaranteed interest rate for a set term, usually 3 to 10 years. Growth is tax-deferred. The guarantee is guaranteed by the issuing insurer’s claims-paying ability, not the FDIC. In exchange for the rate, you accept surrender charges if you take out more than the free amount before the term ends.

How does a MYGA work?

You pay one premium. The insurer credits a fixed rate, usually compounded yearly, for the whole guarantee period. During that period you can typically withdraw the credited interest or 10% a year without charge; more than that triggers a surrender charge and, on many contracts, a market value adjustment. At the end of the term you get a window, often 30 days, to take the money, move it by 1035 exchange, annuitize it, or let it renew.

Worked example. $100,000 in Athene MaxRate 5 at 5.85% ($100,000+, most states, rate card effective September 25, 2026) grows to $132,878 after five years. No tax is due along the way on non-qualified money. If the owner withdrew $30,000 of that interest at 62 in the 24% bracket, about $7,200 would go to federal tax; at 57, a 10% additional tax of about $3,000 would be added.

What is the difference between a MYGA and a CD?

They both pay a fixed rate for a fixed term. Almost everything else is different.

	MYGA	Bank CD	Treasury note
Issued by	Life insurance company	Bank or credit union	U.S. government
Guarantee	Insurer’s claims-paying ability, plus state guaranty association up to its limit	FDIC or NCUA up to $250,000 per depositor, per bank	Full faith and credit of the U.S.
5-year rate, late Sept 2026	5.80-6.00% (A-rated, AnnuityRateWatch, 9/24)	4.35-4.50% APY (top national, DepositAccounts, 9/25)	4.98% (par yield, 9/25)
Tax on interest	Deferred until withdrawn; ordinary income	Taxed every year	Taxed every year; no state tax
Getting out early	Surrender charge (a % of the account) plus possible MVA	Penalty, usually months of interest	Sell at market price
Before age 59½	10% federal additional tax on earnings withdrawn	None	None

More detail: MYGA vs CD, is a MYGA safer than a CD?, and the annuity calculator with a CD toggle.

Rate alert

Rates expire like milk.

The best MYGA, CD and savings rates change every few weeks. Get a short email when a rate on this page changes.

We’ll email you when a rate on this page changes. Hans Goldstein · NPN 20602398.

Rather talk it through? Or book 15 minutes on Hans’s calendar.

What are the downsides of a MYGA?

Surrender charges. Money above the free amount is expensive to reach during the term. Do not use money you may need inside the term. How surrender charges work.
Market value adjustment. If rates have risen since you bought, an early surrender can be reduced further. MVA explained.
Ordinary income tax. Gains are taxed as ordinary income, never at capital gains rates, and come out before principal.
10% before 59½. Earnings withdrawn early may owe a 10% federal additional tax under IRC §72(q).
Carrier risk. The guarantee is only as strong as the insurer. Ratings change: AM Best cut Sentinel Security Life to C+ on September 22, 2026. What happens if an insurer fails.
Renewal rates. If you let it roll over, the renewal rate can be much lower than the initial one (MassMutual’s October 5, 2026 sheet: 2.75% renewal vs 5.65% initial). Renewal rate grading.
No inflation adjustment and no market upside. You get the stated rate and nothing more.

Is a MYGA a good investment?

It is a savings contract, not an investment with upside, and it fits a narrow job well: money you will not need for the whole term, that you want to grow at a known rate without yearly tax. It fits poorly for an emergency fund, for money you may spend inside the term, or for anyone who needs the interest to be state-tax-free (Treasuries win there). If you are under 59½ and may need the earnings early, the 10% additional tax usually makes a CD or Treasury the better tool. My longer take: MYGA pros and cons and the case for a MYGA.

Are MYGA rates going up or down?

Nobody knows, and I do not forecast. What drives them is known: insurers price MYGAs off the yields they earn on new bonds, which move with intermediate Treasury and corporate yields more than with the Fed funds rate. On September 16, 2026 the Fed raised its range 0.25 point to 3.75% to 4.00%; on September 25 the 5-year Treasury was 4.98% and the 10-year 5.17%. A rate you lock today stays fixed for the term either way. See MYGA rates after Fed moves and buy now or wait?

How are MYGAs taxed?

Bought with after-tax money (non-qualified), interest grows tax-deferred; withdrawals come out earnings first and are ordinary income, reported on Form 1099-R. Bought inside an IRA, the IRA rules apply and required minimum distributions still apply. A MYGA can be moved to another annuity tax-free by a 1035 exchange. Non-qualified annuity tax · 1099-R explained.

What happens to a MYGA if the insurance company fails?

Your state’s life and health insurance guaranty association steps in up to its limit. Limits vary: many states cover $250,000 of annuity present value per owner per insurer, and California covers 80% of the value up to $250,000. Above the limit, split the money across insurers. California guaranty coverage · limits by state.

How do I choose a MYGA?

Pick the term you can hold to the end without touching more than the free amount.
Compare compound rates for your state and premium band, dated. Start with best 5-year MYGA rates or all terms.
Check the insurer’s AM Best rating and recent rating actions.
Read the surrender schedule, the MVA and the free-withdrawal terms before the rate.
Note the maturity date and what happens if you miss the window.

Full checklist: MYGA buyer’s guide. Ladders: MYGA laddering.

MYGA reviews by contract

More MYGA guides

Who publishes this page. Hans Goldstein, independent licensed insurance producer, CA Insurance License #4273294, NPN 20602398 · Goldstein & Co. LLC dba Goldstein Insurance Services, CA License #6016830. Questions: hans@hansgoldstein.com. I am paid a commission by the insurer when a client buys an annuity through me; see my commission disclosure. No carrier paid to be listed or ranked here.

What the guarantee is. Fixed annuity and MYGA guarantees are guaranteed by the issuing insurer’s claims-paying ability. Annuities are insurance contracts, not bank deposits: they are not FDIC-insured, not bank-guaranteed and not a CD. State guaranty association protection has limits and varies by state. Surrender charges and, on many contracts, a market value adjustment apply to withdrawals above the free amount during the surrender period. Withdrawals of earnings are taxed as ordinary income and, before age 59½, may also owe a 10% federal additional tax (IRC §72(q)).

Education, not tax or legal advice. Rates and payouts vary by state, premium, age and date; confirm on the carrier’s rate sheet or a signed illustration before you buy.

Frequently asked questions

What is a MYGA annuity?

A multi-year guaranteed annuity is a fixed annuity that pays one guaranteed interest rate for a set term, usually 3 to 10 years, with tax-deferred growth. It is guaranteed by the issuing insurer's claims-paying ability and has surrender charges for early withdrawals above the free amount.

What is the downside of a MYGA?

Surrender charges and often a market value adjustment on early withdrawals, earnings taxed as ordinary income, a possible 10% federal additional tax before 59½, dependence on the insurer's financial strength, and renewal rates that can be much lower if you let it roll over.

Is a MYGA a good investment?

It is a good fit for money you will not need during the term and want to grow at a known, tax-deferred rate. It is a poor fit for emergency money, for money you may need early, or where state-tax-free Treasury interest matters more.

Are MYGA rates going up or down?

No one can say reliably. MYGA rates follow insurers' new-money bond yields. On September 24, 2026 A-rated 5-year MYGAs paid about 5.80% to 6.00%, and the 5-year Treasury was 4.98% on September 25. A locked rate stays fixed for the term.

Is a MYGA safer than a CD?

They are protected differently. A CD is a bank deposit insured by the FDIC up to $250,000. A MYGA is guaranteed by the insurer's claims-paying ability, backed by a state guaranty association up to its limit (in California, 80% up to $250,000).

Can you lose money in a MYGA?

Not from market moves if you hold it to the end of the term. You can lose money by surrendering early (surrender charge and possibly an MVA) or if the insurer fails and your balance exceeds your state's guaranty limit.