Annuity vs CD Calculator, Head-to-Head Net Dollar Chart
TL;DR: Same dollars, same term, annuity vs CD with full tax treatment. Year-by-year balances side-by-side. Shows the exact dollar advantage of the annuity (tax-deferred) over a CD (taxed yearly) for your specific bracket and state.
| Product | Rate | Source, as of |
|---|---|---|
| A-rated 5-year MYGAs (market range) | 5.80-6.00% | AnnuityRateWatch carrier data, 9/24/2026 |
| New York Life Secure Term Fixed Annuity V, 5-year, $100,000+ (A++ carrier) | 5.30% | nylannuities.com rates, effective 9/21/2026 |
| Top nationally available 5-year CDs | 4.35-4.50% APY | DepositAccounts, 9/24/2026 |
The calculator's default inputs (CD 4.40%, annuity 5.85%) sit inside these September 24, 2026 ranges. MYGA rates vary by state, premium and issue age.
How this calculator works
Two tax mechanics, same as the after-tax calculator:
CD: taxed every year. Effective compound rate = nominal rate × (1 minus combined tax rate). Year-by-year growth is steady but slower.
Annuity: nominal rate compounds untouched. Tax applied to total gain at the end (or staged at withdrawal).
The year-by-year chart shows the running balance of each. CD's after-tax growth is shown each year (since tax is paid currently); annuity shows gross growth (since tax is deferred). At end of term, annuity gets a tax haircut on accumulated gain, usually still beats the CD net.
Combined tax rate = federal bracket + state tax + (NIIT 3.8% if MAGI > $200K single / $250K joint).
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What the result means
The big number is the annuity net advantage at the end of the term, fully after-tax. Positive = annuity wins. Negative = CD wins (rare in realistic scenarios).
The year-by-year table shows the after-tax CD value vs the gross deferred annuity value. The annuity values look "ahead" each year, that's because the CD has been paying tax all along. The fair comparison is at end of term, after the annuity's withdrawal tax.
When MYGA wins / when the alternative wins
Annuity wins when: 22%+ federal, any state tax, 3+ years. The deferral edge compounds.
CD wins when: 0-12% federal bracket, no state tax, short horizon. The deferral edge is minimal.
Treasuries win when: high state tax, willing to lose nominal yield for state-tax exemption.
Worked example
Scenario: $250K, 5-yr term, 24% federal, 9.3% CA. CD 4.40%, Annuity 5.85% (both inside the September 24, 2026 market ranges above).
- Year 5 CD after-tax balance: ~$288K
- Year 5 Annuity gross: ~$332K. Apply 33.3% tax on $82K gain: ~$305K net
- Annuity wins by ~$17K (6.8% of principal) over 5 years
Common mistakes
- Comparing pre-tax balances. The annuity always looks better pre-tax, do the apples-to-apples after-tax comparison.
- Forgetting state tax. CA, NY, NJ residents see the biggest annuity win.
- Ignoring rate spread. Even at same rate, annuity wins; with a spread of about 130-165 bps (A-rated 5-year MYGAs vs top 5-year CDs, September 24, 2026), the gap widens.
- Not staging withdrawals. Pulling the entire annuity gain in one year can push you into a higher bracket. Stage across 2-3 years.
- Ignoring liquidity cost. Annuity surrender charges apply if you need full access before term ends. CD early withdrawal usually costs 3-12 months of interest.
Related calculators & reviews
- MYGA Growth Calculator
- MYGA vs CD After-Tax Calculator
- MYGA Monthly Income Calculator
- Annuity Payout Calculator
- Social Security Bridge Calculator
FAQ
Q: Is the annuity rate guaranteed?
A: Yes, on a MYGA, the rate is locked for the full surrender period (3-10 years typically).
Q: What if rates rise during my CD/annuity term?
A: Both are locked at issue. CD: you eat early-withdrawal penalty to get out. MYGA: surrender charges (or 1035 to better rate, see our timing calculator).
Q: Are MYGAs FDIC?
A: No, insurance contracts backed by carriers and state guaranty associations (typically $250K-$500K per carrier per state).
Q: What if I die during the term?
A: Both pass to heirs at full value (CD: as cash; MYGA: account value, no surrender charge). MYGA gains transfer with original cost basis.
Q: Can I beat both with stocks?
A: Over long horizons, historical equity returns 7-10% beat both. But these calculators compare GUARANTEED instruments, you're paying for certainty, not maximum return.
Q: Does combined tax rate go above 50%?
A: At top federal (37%) + CA top (13.3%) + NIIT (3.8%) = 54.1%. That's the worst-case combined rate.
Q: What about Treasury yields vs annuity?
A: Treasuries are state-tax-exempt but federally taxed yearly. For high-bracket CA/NY residents, MYGA usually still wins after the full math, especially for 5+ year horizons.
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Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This calculator is for educational and illustrative purposes only and is not a personalized recommendation, solicitation, or offer of any specific product. Outputs are approximations using publicly available rates, IRS tables, and standard payout factors as of 2026; actual carrier illustrations may differ. Annuity rates, caps, payout factors, surrender schedules, and tax brackets change frequently. Always confirm current values against the most recent carrier disclosure document, IRS Publication 590-B, and the actual contract before purchasing. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. Tax discussion reflects federal law as of 2026 and is subject to change. Consult a CPA and licensed advisor before acting on any output shown.