What Are Multi-Year Guaranteed Annuities?
Multi-Year Guaranteed Annuities, or MYGAs, are the simplest and most dependable type of fixed annuity. They offer a guaranteed interest rate for a set number of years- much like a CD, but often offer higher rates and carry valuable tax advantages such as tax-deferral During that period, your money isn't exposed to market losses, and your growth compounds quietly and consistently behind the scenes. FOr many retirees, MYGAs provide something rare in todays 's financial world: clarity. You know exactly what you'll earn. exactly how long you'll earn it for, and exactly what your options are at the end of the term. Whether you're looking to protect a portion of your savings, create a safe place for money during volatile markets, or lock in a strong guaranteed rate while you plan your next move, a MYGA offers stable, contractually guaranteed growth you can count on.
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How MYGA's Work
A Multi-Year GUaranteed Annuity operates by locking in a fixed interest rate for a specific period of time- typically 2, 3, 5, or, 7 years. When you fund a MYGA, the insurance company invests your premium in its general account along with all other contract owners and credits your contract with a guaranteed interest rate that cannot change during the term, regardless of market conditions.
Your interest grows tax-deferred, meaning you won't pay taxes until you take withdrawals, which can be during the term of the contract under contractually specified liquidity provisions, which allow the contract to compound interest more efficiently. Throughout the term, your principal is protected from market losses, and the insurer is obligated to, by contract, credit the exact rate rate that you agreed to. At the end of the guarantee period, you can renew at a new rate, transfer to another annuity without taxes via a 1035 exchange (non-taxable transfer to another annuity), withdraw funds, or reposition the money based on your needs. This structure makes MYGA's a precise tool for managing timing risk, preserving safe assets, and stabilizing the fixed-income portion of a retirement plan.