Where to Park Cash for 1 Year: HYSA vs T-Bill vs MMF vs CD
The 5-option decision matrix
| Option | Yield (2026) | Liquidity | Tax Treatment | Best For |
|---|---|---|---|---|
| HYSA | 4.50% | Instant (1-3 day ACH) | Fed + state ordinary | Cash you might need anytime |
| Money market fund (VMFXX) | 4.45% | 1-day brokerage settlement | Fed (mostly), partial state-exempt | Brokerage cash; slight tax win in high-state-tax |
| 52-week T-bill | 4.70% | Secondary market sell anytime | Fed only (state-exempt) | High-state-tax savers wanting term premium |
| 12-month brokered CD | 5.05% | Secondary market sell anytime (may discount) | Fed + state ordinary | Highest gross yield in low-state-tax states |
| 12-month direct bank CD | 4.95% | Lock for term; early-withdrawal penalty | Fed + state ordinary | Conservative savers who won't touch it |
| 3-year MYGA (don't use) | 5.55% | Locked - surrender penalty | Fed (deferred), state ordinary | Wrong tool for 1-year - 5-year minimum hold |
After-tax yield comparison
In a 0% state-tax state (TX, FL, TN)
| Option | Gross | After 24% Federal | Rank |
|---|---|---|---|
| 12-month brokered CD | 5.05% | 3.84% | 1 |
| 12-month direct CD | 4.95% | 3.76% | 2 |
| 52-week T-bill | 4.70% | 3.57% | 3 |
| HYSA | 4.50% | 3.42% | 4 |
| Money market fund | 4.45% | 3.38% | 5 |
In a high-state-tax state (CA 9.3%)
| Option | Gross | After 24% Fed + 9.3% CA | Rank |
|---|---|---|---|
| 52-week T-bill | 4.70% | 3.57% | 1 |
| 12-month brokered CD | 5.05% | 3.36% | 2 |
| VMFXX (60% Treasury) | 4.45% | 3.33% | 3 |
| 12-month direct CD | 4.95% | 3.30% | 4 |
| HYSA | 4.50% | 3.00% | 5 |
The T-bill jumps from rank 3 to rank 1 just by switching states. State tax matters more than savers realize.
Liquidity comparison
| Option | Same-day Cash? | 1-3 Day Cash? | Penalty if Sold Early? |
|---|---|---|---|
| HYSA | Yes (debit card variants) | Yes (ACH) | None |
| MMF | No | Yes (T+1 settlement) | None |
| T-bill (secondary market) | No | Yes (T+2) | None if rates flat; market price adjustment if rates moved |
| Brokered CD | No | Yes (secondary market T+2) | Same - market price, possible discount |
| Direct bank CD | No | Yes via early withdrawal | Forfeit 3-6 months interest |
Worked example: $50,000 for exactly 12 months
Saver in California, 24% federal + 9.3% CA marginal, money definitely earmarked for a known purchase in 12 months (down payment, college tuition payment).
| Option | Gross Interest | After-Tax Interest | Net |
|---|---|---|---|
| HYSA at 4.50% | $2,250 | $1,500 | $51,500 |
| 52-week T-bill at 4.70% | $2,350 | $1,785 (state-exempt) | $51,785 |
| 12-month brokered CD at 5.05% | $2,525 | $1,683 | $51,683 |
T-bill wins for the CA saver by $102 (vs CD) and $285 (vs HYSA). The state-tax exemption is the decisive factor.
Why no MYGA at 1 year
MYGAs are designed for 3-10 year terms. The shortest commonly available is a 3-year MYGA. Buying a 3-year MYGA and surrendering at year 1 triggers an 8-9% penalty - vastly more than the yield premium. Stay in CD/HYSA/T-bill territory for 1-year cash.
When to pick which
- HYSA: Money might be needed earlier than 12 months. Or you want zero hassle.
- 52-week T-bill: Live in a high-tax state, want term premium, OK with brokerage account.
- Brokered CD: Live in low-tax state, want top gross yield, OK with brokerage account.
- Direct bank CD: Want to use your existing bank, OK with the slightly lower brokered-vs-direct spread, want a fixed maturity date.
- MMF: Already in a brokerage, want easy buying of CDs/T-bills, willing to accept slightly lower yield for convenience.
The hidden cost of HYSA at 1 year
HYSA yields move with Fed Funds. If the Fed cuts 50 bps in the next 6 months (likely per current dot plot), your HYSA yield drops within 60 days. The 12-month return won't be 4.50% - it'll be more like 4.15-4.30% blended.
A 12-month CD or T-bill locks today's yield for the full term. In a falling-rate environment, the lock wins by 25-50 bps.
Related reading
- Where to park cash for 3 years
- Where to park cash for 5 years
- HYSA vs checking account
- CD secondary market explained
Frequently Asked Questions
Why is the brokered CD higher than the direct bank CD?
Brokered CDs reach a wider buyer pool through bond marketplaces (Schwab, Fidelity). The bank pays a slight premium to attract that distribution. Trade-off: brokered CDs only support secondary-market exit, not early-withdrawal.
Can I buy a T-bill at TreasuryDirect for free?
Yes. TreasuryDirect is the US Treasury free-of-charge platform. The user experience is dated but the auctions are real. Most savers find it easier to buy at Fidelity/Schwab/Vanguard with no commission and faster settlement.
Is a 12-month CD better than a 1-year HYSA in a stable-rate environment?
Slightly. The CD locks a 25-55 bps premium for the year. If rates don't move, the CD wins by ~$125-$275 on $50K. If rates fall, the CD wins by more.
What if I sell my T-bill before the 52-week maturity?
You sell at the prevailing market price. If interest rates went up since you bought, you sell at a small discount (capital loss). If rates went down, you sell at a small premium (capital gain). The T-bill remains state-tax-exempt.
Are brokered CDs FDIC-insured?
Yes, each issuing bank is FDIC-insured up to $250K. Brokerage platforms aggregate CDs from many banks, so you can hold $1M of brokered CDs across 4-5 banks under one Fidelity/Schwab account, all fully FDIC-insured.
Should I split $100K across multiple 1-year options?
Probably not for a 1-year horizon. The optimization headache (3 accounts, 3 1099s, manual coordination) isn't worth $50-$150 of incremental yield. Pick the top option for your tax situation and put it all there. Split-stack saves more at 3+ year horizons.
What is the floor below which I should not bother with any of this?
Below $10K, just use a HYSA. The yield differential is too small to justify the complexity. Above $25K, start considering T-bills. Above $100K, the splits start to pay off.
Want a second opinion on your cash strategy?
Talk to a licensed independent advisor. Hans.
HYSA yields move with Fed Funds. MYGA lock windows close fast when the cycle turns. The difference between a good and a great cash strategy on $250K+ over 5 years is usually $20,000-$50,000 in real interest. Worth a 15-minute conversation.
Drop your info and you will get a written allocation review across HYSA, CD, MYGA, and T-bill options — 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 article reflects publicly available rates, products, and tax law as of 2026-06-27. HYSA yields, CD rates, MYGA rates, and FDIC/state guaranty fund limits change frequently. Always confirm current values against the most recent provider disclosures and tax law before acting. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers across the annuity and long-term care insurance market. No compensation has been received from any bank, credit union, or insurance carrier in connection with the publication of this article. Always read the actual contract or account disclosure and consult a licensed advisor or tax professional before making material cash-management decisions. Past rate environments do not predict future rates.