Multi-Year Guarantee Annuities (MYGAs), also known as Fixed Rate or CD-type Annuities, are a type of fixed annuity that provide a pre-determined and contractually guaranteed interest rate for a specified period of time, most commonly 3-10 years. For this reason, they are often compared to Bank CD’s.
Individuals who choose to deposit their money into a principal protected MYGA can rest assured knowing the exact amount of interest their annuity is going to earn and the exact amount of time their annuity will continue to earn the specified rate. Multi-Year Guarantee Annuities are predictable retirement savings products because the issuing insurance company cannot reduce the interest rate during the guarantee period.
At the end of the initial guarantee period, the insurance company will typically offer a renewal interest rate. If the renewal rate offered is acceptable, you can renew your term in the same annuity contract and let your funds continue to grow at that new rate. If the new rate is not acceptable, nearly all MYGAs provide a penalty free withdrawal window where you are allowed to move your funds to a higher yielding annuity with a different insurance company, via a transfer or tax-free 1035 exchange. Or, you may also choose to completely cash-in and surrender your contract, again without penalty.
Additional Benefits of Multi-Year Guarantee Annuities
Typically offer higher interest rates than Bank CD’s for the same term
Interest earnings are tax-deferred when compounded (Grow Your Money)
Can be purchased with both non-qualified as well as tax-qualified IRA funds
Liquidity options for penalty free and systematic withdrawals (Get Income Now)
Lifetime income options available (Guarantee Future Income)
Principal guaranteed…free from market risk and price fluctuations
Avoids probate, passing to named beneficiaries at death
No fees, loads or sales charges
If you are interested in exploring your Multi-Year Guarantee Annuity options, just give us a call at 1-800-674-3145. One of our licensed Annuity Specialists would be happy to provide additional details and answer any questions you may have.
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