Calculator Author: Hans Goldstein, NPN 20602398 Updated: 2026-06-27

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.

Annuity vs CD Calculator

Same dollar amount, same term — head-to-head net dollars after tax. State + bracket aware.

Deposit ($)

Term (years)

CD rate (%)

Annuity rate (%)

Federal bracket (%)

State tax (%)

Annuity net advantage over CD

After tax, end of term.

Year	CD after-tax	Annuity (deferred)

Run a real annuity quote

CD interest is taxed yearly at federal + state rates. Annuity (non-qualified MYGA) defers all gains until withdrawal; gains are then taxed as ordinary income (no state tax in some states until withdrawal too). The deferral compounding effect grows non-linearly with term.

How this calculator works

Two tax mechanics, same as the after-tax calculator:

CD: taxed every year. Effective compound rate = nominal rate × (1 - 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).

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%.

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 100+ bps spread (typical in 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

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.

Run the numbers? Get my second-opinion review.

Calculator output is a starting point — not a quote. Real carrier rates change weekly. I'll pull live MYGA quotes from 30+ carriers and tell you which one actually wins for your dollar amount, term, and tax situation.

Drop your info — within 24 hours, you'll get a written breakdown of your scenario, side-by-side comparisons vs. 2 alternatives, and a no-pressure 15-minute call if you want one.

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.