Retirement Literacy Foundation · Annuity Education

What Is a MYGA? Multi-Year Guaranteed Annuities Explained

By Hans Goldstein, founder, Retirement Literacy Foundation · Updated October 8, 2026

Short answer: A multi-year guaranteed annuity (MYGA) is a fixed annuity that locks one interest rate for a set term, often 3 to 10 years. It works a lot like a CD issued by an insurance company, with two big differences: the interest is tax-deferred until you take it out, and it is backed by the insurer and state guaranty associations, not the FDIC.

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How a MYGA works

You deposit a lump sum. The insurer credits a stated rate every year for the term you pick.
Interest compounds inside the contract with no tax until you withdraw it.
At the end of the term you can take the money, renew, or move it to another annuity with a 1035 exchange.
Most MYGAs let you withdraw some money each year without a charge (often the interest, or up to 10%), and charge a surrender charge on larger early withdrawals. The surrender period usually matches the rate term.

MYGA vs CD

	Bank CD	MYGA
Backed by	FDIC up to its limits	The insurer, plus state guaranty association up to its limits
Tax on interest	Every year	Deferred until withdrawn, then ordinary income
Early exit	Interest penalty	Surrender charge, possibly a market value adjustment, and a 10% extra tax before 59½
Typical terms	Months to 5 years	Often 3 to 10 years

The RLF tracks how MYGA rates compare with CDs and Treasuries in its MYGA vs CD spread index. See also annuity vs CD.

Taxes

Interest is taxed as ordinary income when withdrawn. In a non-qualified MYGA, withdrawals come out interest first. A MYGA can also be held inside an IRA, where the normal IRA and RMD rules apply. Details: how annuities are taxed.

What to compare

The guaranteed rate and term, and what happens at renewal.
The surrender schedule and free withdrawal amount.
Whether there is a market value adjustment.
The insurer's financial strength ratings and ownership: see who owns your insurer.
The commission built in: MYGAs have paid the lowest published average among fixed annuities. See annuity commissions.

Common questions

Is a MYGA safe?

The rate and principal are guaranteed by the issuing insurer, not the FDIC. State guaranty associations back annuity owners up to limits if an insurer fails. The insurer's financial strength matters.

Are MYGA earnings taxable?

Yes, as ordinary income when withdrawn. Until then the interest grows tax-deferred.

What happens when a MYGA term ends?

You usually get a window, often 30 days, to withdraw without a charge, renew at the insurer's new rate, or move the money with a 1035 exchange.

More on annuities: How Do Annuities Work? A Plain-English Guide · How Are Annuities Taxed? · Inherited Annuity Taxes · 1035 Exchange · Annuities in an IRA · Annuity Surrender Charges and How to Get Out of an Annuity · Types of Annuities and Their Pros and Cons · Fixed Index Annuity Explained · Immediate Annuity (SPIA) Explained · Variable Annuity Explained · Annuity vs CD

Education only; nothing is sold here and no product is recommended. Hans Goldstein, founder of the Retirement Literacy Foundation, is also a licensed California insurance producer (#4273294). Tax rules depend on your situation; check with a tax professional before acting.