Annuity type · Sioux Falls & South Dakota
Multi-Year Guaranteed Annuity (MYGA)
A multi-year guaranteed annuity, or MYGA, credits a fixed interest rate that is guaranteed for the entire guarantee period you select, commonly three to ten years. It works much like a fixed annuity, except the rate is locked for the full term rather than redeclared periodically.
Who it may suit
- Savers who want a known rate for a known number of years
- People who have money they will not need until a specific future date
- Those comparing options for money currently sitting in CDs or savings
How it generally works
You pay a single premium and select a guarantee period. The insurer credits a fixed rate for that entire period, so you know at purchase what the value will be at the end of the term if you make no withdrawals.
Interest accumulates tax deferred inside the contract. This differs from a CD, where interest is generally taxable in the year it is credited even if you leave it in the account.
At the end of the guarantee period you typically choose among renewing at the rate then offered, withdrawing the value, transferring to another annuity, or annuitizing. Contracts usually provide a short window to decide, and some renew automatically if you do nothing, so mark the date.
Potential advantages
- A known rate locked for the full guarantee period
- Tax-deferred accumulation, unlike a taxable CD
- Simple mechanics with no caps, participation rates, or index formulas
- A stated value at the end of the term if no withdrawals are taken
Important limitations
- Surrender charges apply if you withdraw more than the contract allows before the term ends
- A market value adjustment can raise or lower the amount you receive on an early surrender
- Not FDIC insured, unlike a bank CD
- If rates rise during your term, you are locked into the earlier rate
Access to your money
A MYGA is designed to be held for the full guarantee period. Withdrawing more than the free-withdrawal amount before the term ends generally triggers a surrender charge and may trigger a market value adjustment, which can reduce the amount you receive if interest rates have risen. Many contracts permit a limited penalty-free withdrawal each year. Confirm the exact schedule before you buy.
What may affect your rate or income
- The length of the guarantee period selected
- The premium amount, since many contracts band rates by deposit size
- Prevailing interest rates when the contract is issued
- The issuing insurer and its current rate offerings
- Whether any optional features are elected
Optional rider categories
- Nursing home or terminal illness waiver
- Return-of-premium feature on some contracts
- Systematic interest withdrawal option
Rider availability, definitions, and cost vary by contract and carrier, and riders often carry a charge.
How it is generally taxed
Growth inside an annuity is generally tax deferred, meaning you are typically not taxed on interest credited until you take money out. Withdrawals of gain are generally taxed as ordinary income rather than at capital-gains rates, and amounts withdrawn before age 59 and a half may be subject to an additional 10% federal tax. Tax treatment depends on your situation and on whether the contract is qualified or non-qualified. We are not tax advisors, so please confirm details with a tax professional.
How it compares
Multi-Year Guaranteed Annuity (MYGA): frequently asked questions
How is a MYGA different from a CD?
A CD is a bank deposit that is typically FDIC insured, and its interest is generally taxable each year. A MYGA is an insurance contract backed by the issuing insurer rather than the FDIC, and its interest is generally tax deferred until you withdraw. The surrender rules also differ from a CD's early-withdrawal penalty.
What is a market value adjustment?
It is a contract provision that adjusts the amount you receive if you surrender early, based on how interest rates have moved since you bought. If rates have risen, it typically reduces what you receive. If rates have fallen, it can increase it. It applies only to early withdrawals above the free amount.
What happens at the end of the guarantee period?
You generally choose to renew, withdraw, transfer to another annuity, or annuitize. Windows are often short and some contracts renew automatically, so note the maturity date when you buy and we will follow up as it approaches.
About this information
This page is general education reviewed by Big Sioux Life. It is not a substitute for the contract, the disclosure statement, or professional advice. Rates, caps, and participation rates change and vary by carrier and state, so we do not publish them here. For authoritative details, consult your state department of insurance and the specific carrier's contract documents. See our editorial policy.
This page is educational and is not insurance, financial, tax, or legal advice. Annuities are insurance contracts, not bank deposits. They are not FDIC insured and not bank guaranteed. Product availability, features, rates, caps, and provisions vary by carrier and state and are subject to change. Any guarantees are backed solely by the claims-paying ability of the issuing insurer. Withdrawals may be subject to surrender charges and a market value adjustment, and withdrawals taken before age 59 and a half may be subject to an additional 10% federal tax. No contract exists until it is issued and in force. A MYGA is not a certificate of deposit and is not FDIC insured.