- A MYGA (Multi-Year Guaranteed Annuity) locks in a fixed interest rate for an entire term — 3, 5, 7, or 10 years. No annual resets.
- Today’s top MYGA rates run 5.40%–5.90%, generally higher than comparable bank CDs.
- Unlike CDs, MYGA interest is tax-deferred — no annual tax bill until you withdraw.
- MYGAs are not FDIC insured, but are protected by state guaranty associations (typically up to $250,000).
- At maturity, you can withdraw, renew, or do a tax-free 1035 exchange to another annuity.
A MYGA — Multi-Year Guaranteed Annuity — is a fixed annuity that locks in a guaranteed interest rate for a set number of years. Whatever rate you secure at purchase, you earn it for the entire term. No surprises, no resets, no market exposure.
In 2026, with top MYGA rates in the 5.40%–5.90% range, MYGAs have become one of the most competitive safe-money options available — regularly outpaying CDs from major banks while offering the added benefit of tax-deferred growth.
For conservative investors who want to know exactly what their money will earn over the next 3–10 years, MYGAs are worth a hard look.
How Does a MYGA Work?
You deposit a lump sum — typically $10,000 or more — and the insurance company credits a fixed interest rate for the full term you select. The interest compounds annually inside the contract.
Example: David, age 68, puts $250,000 into a 5-year MYGA at 5.70%. Here’s what his account looks like over the term:
- Year 1: $264,250
- Year 2: $279,052
- Year 3: $294,902
- Year 4: $311,611
- Year 5: $329,272
That’s $79,272 in guaranteed growth — with zero market risk and no annual tax bill. David pays taxes only when he withdraws, typically in a lower bracket in retirement.
Compare that to a 5-year bank CD at 4.85%: the same $250,000 grows to $316,380 — nearly $13,000 less — and David owes income tax on the interest every year, further reducing his net return.
MYGA vs. CD: Which Pays More?
MYGAs and CDs look similar on the surface — both are fixed-rate products with a set term and penalties for early withdrawal. But there are meaningful differences:
| Feature | MYGA | Bank CD |
|---|---|---|
| Current 5-year rate (top) | 5.75% | 4.85% |
| Tax treatment | Tax-deferred | Taxed annually |
| FDIC insured | No | Yes (up to $250k) |
| State guaranty protection | Yes (varies by state) | No |
| Early withdrawal penalty | Surrender charge (contract-based) | Interest penalty (typically 90–180 days) |
| Free withdrawal provision | Often 10%/year | None (usually) |
| Death benefit | Yes — passes to beneficiary | Goes through estate/probate |
The tax deferral alone on a MYGA is worth significant money. A 55-year-old in the 24% tax bracket who invests $200,000 in a 5-year MYGA at 5.70% vs. a CD at 4.85% comes out ahead by roughly $22,000 after tax — a combination of higher rate and deferred taxation.
Full MYGA vs. CD comparison: see the side-by-side numbers →
What Are the Best MYGA Rates Right Now?
MYGA rates vary by term and carrier. In general, longer terms pay higher rates because you’re committing for longer — the insurance company can invest in longer-duration bonds and pass more yield to you.
Current top rates from A-rated carriers (early 2026):
| Term | Top Rate | Typical Range |
|---|---|---|
| 3-Year MYGA | 5.40% | 4.80% – 5.40% |
| 5-Year MYGA | 5.75% | 5.10% – 5.75% |
| 7-Year MYGA | 5.85% | 5.20% – 5.85% |
| 10-Year MYGA | 5.90% | 5.30% – 5.90% |
Rates change frequently. See today’s current MYGA rates updated regularly →
How to Choose the Right MYGA Term
The right term depends on when you need the money and your view on interest rates.
Choose a shorter term (3 years) if:
- You think rates will rise and want to roll into a higher rate at maturity
- You may need the funds in 3–4 years
- You’re using the MYGA as a CD replacement with better yield
Choose a longer term (5–10 years) if:
- You want to lock in today’s historically competitive rates for as long as possible
- You won’t need the money for 5+ years
- You believe rates may fall and want protection against that
Many retirement planners use an “annuity ladder” strategy — splitting money across 3-year, 5-year, and 7-year MYGAs so a portion matures every few years. See how the annuity laddering strategy works →
Are MYGAs Safe?
MYGAs are backed by the insurance company that issues them — not the FDIC. If the insurer fails, your protection comes from your state’s guaranty association.
Most states cover $250,000 per owner per insurer. A few states (New York, California) offer higher limits. You can split deposits across multiple carriers to maximize coverage.
The practical risk is low when you stick with financially strong carriers. AM Best ratings of A- or better indicate solid financial health. A-rated insurers have failed, but it’s rare — and policyholders have generally been protected by the guaranty system.
Never buy a MYGA from an unrated carrier chasing the highest rate. A 0.25% rate advantage from an insurer with a B+ rating is not worth the added credit risk.
What Happens When a MYGA Matures?
At the end of your MYGA term, you typically have a window — often 30 days — to decide what to do with the money. Your options:
- Withdraw everything. You’ll owe income tax on the accumulated interest. No surrender charge.
- Renew with the same carrier. They’ll offer a new rate for a new term. You’re not obligated to accept it.
- Do a 1035 exchange. Transfer the entire balance — including interest — to a new annuity tax-free. If a competitor is offering a better rate, this is how you capture it without a tax event.
- Annuitize. Convert the balance into guaranteed lifetime income payments.
The 1035 exchange is one of the most powerful tools in an annuity owner’s toolbox. It lets you stay in the tax-deferred environment indefinitely while shopping for the best available rates at each renewal.
MYGA Pros and Cons
Advantages
- Highest guaranteed rates among safe-money products
- Tax-deferred growth — no annual 1099
- Rate certainty for the full term — no surprises
- Death benefit passes directly to beneficiaries
- 10% annual free withdrawal on most contracts
- 1035 exchange flexibility at maturity
Disadvantages
- Not FDIC insured
- Surrender charges for early withdrawal during the term
- 10% IRS penalty if withdrawn before age 59½
- Gains taxed as ordinary income, not capital gains
- No upside potential beyond the guaranteed rate
Related reading: See our guide to how annuity ownership can affect Medicaid eligibility.
Frequently Asked Questions About MYGAs
What does MYGA stand for?
MYGA stands for Multi-Year Guaranteed Annuity. It’s a type of fixed annuity that locks in a guaranteed interest rate for a specified number of years — typically 3, 5, 7, or 10 — without annual resets.
Are MYGAs FDIC insured?
No. MYGAs are insurance products, not bank deposits, so they are not FDIC insured. They are protected by state guaranty associations, which typically provide coverage up to $250,000 per owner per insurance company.
What happens when my MYGA matures?
When your MYGA term ends, you typically have a 30-day window to withdraw penalty-free, renew with the same carrier, or execute a tax-free 1035 exchange to a new annuity with a different carrier. No action usually triggers an automatic renewal.
Can I withdraw money from a MYGA early?
Most MYGAs allow a free withdrawal of up to 10% of the account value per year without penalty. Withdrawing beyond that during the surrender period triggers surrender charges, which decline each year of the contract. Full surrender in year one typically costs 7–9%.
Do I pay taxes on MYGA interest every year?
No. Interest inside a MYGA accumulates tax-deferred — you receive no annual 1099. Taxes are owed only when you take withdrawals, at which point gains are taxed as ordinary income.
What is the minimum investment for a MYGA?
Minimums vary by carrier, but most require $10,000 to $25,000. Some carriers offer MYGAs with minimums as low as $5,000. There is no maximum contribution limit for non-qualified annuities.
Is a MYGA better than a CD?
MYGAs typically offer higher rates than bank CDs for equivalent terms, and the tax-deferred growth increases the effective yield further. The trade-off is that MYGAs are not FDIC insured. For investors in higher tax brackets with funds they won’t need immediately, MYGAs often outperform CDs on an after-tax basis.
