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A MYGA is a type of fixed annuity that offers a guaranteed interest rate for a specific number of years, typically between 3 and 10 years.
When you purchase a MYGA, you deposit a lump sum with an insurance company. In return, the insurer guarantees a fixed interest rate for the chosen term. Your money grows tax-deferred until withdrawal.
MYGAs are ideal for conservative investors seeking predictable growth, tax-deferred earnings, and principal protection without stock market exposure.
Interest rates are set by the issuing insurance company based on market conditions and the length of the contract.
MYGAs often offer higher interest rates than bank CDs and benefit from tax-deferred growth, whereas CD interest is taxed annually.
No, MYGAs lock in a fixed interest rate for the entire contract term, providing stability and predictability.
Most MYGAs allow penalty-free withdrawals of up to 10% of the account value annually. Withdrawals beyond that may incur surrender charges.
You typically have several options: withdraw your funds, roll them into a new MYGA, or convert them into an income stream.
Yes, surrender charges apply if you withdraw more than the penalty-free amount before the term ends. These charges decrease over time.
MYGA earnings grow tax-deferred. You only pay taxes when you withdraw funds, at which point earnings are taxed as ordinary income.
MYGAs typically have no annual fees, but early withdrawals beyond the allowed amount may result in surrender charges and tax penalties.
A MYGA provides a fixed, guaranteed rate, whereas an indexed annuity offers returns linked to a market index with potential for higher gains but no guaranteed rate.
Yes, MYGAs are backed by the financial strength of the issuing insurance company and are further protected by state guaranty associations up to certain limits.
