Multi-Year Guaranteed Annuities

An MYGA, meaning a multi-year guaranteed annuity, offers a fixed pre-established and contractually approved interest rate for a designated period of time. This is one option when creating and building savings for retirement or tax-benefit investment accounts. With a traditional fixed annuity, the rate may only endure a fraction of the duration you’ve agreed to. However, an MYGA would guarantee you a fixed rate for a contracted term, usually lasting in the middle of one year up to 10 years.

Benefits of an MYGA

People prefer a multi-year guarantee annuity for several reasons:

Less risky

Since that MYGAs offer a guaranteed interest rate for an entire contracted term, many considered it to be a less risky investment than other annuities. Returns on some annuities, such as variable and indexed annuities, are directly tied to the stock market. Therefore, while the reward potential is higher with variable and indexed annuities, so is the risk.

Tax-deferred interest

MYGAs are tax-deferred, which means you will not owe taxes on the growth of your MYGA until you begin to withdraw from the account. When you purchase an MYGA with qualified funds, you will pay income tax on the principal amount and interest when making withdrawals. When purchasing an MYGA with non-qualified funds, only the interest is taxable.

Withdrawals without penalties

The opportunity to make yearly withdrawals without incurring penalties provides you with more options. For example, if you need money to pay a large medical bill that your health insurance won’t fully cover, you could use money from your MYGA. This is much more preferable than withdrawing funds through an IRA or 401(k) loan. While MYGAs come with fees, they may be less compared to other types of annuities. The general rule of annuities is the less complicated they are, the fewer fees you’ll pay.

Things to know before purchasing an MYGA

There are a few factors to bear in mind if you’re considering an MYGA as a means to contribute to your retirement fund:


Multi-year guaranteed annuities are usually better suited for those nearing retirement, rather than young savers. If you are younger and looking for a retirement plan, you might receive better returns on investment through a 401(k) plan or an IRA.

What can an annuity do for you?

This is an important question to consider when contemplating an MYGA. An MYGA does not guarantee a dependable, steady income.

Return potential

Multi-year guaranteed annuities are designed for those looking to make safe investments and in return conservative returns. Due to the situation, MYGAs may find it difficult to keep up with inflation. Another sort of annuity may be for you if you want to take larger risks on your investments for a potentially larger reward.

If you are interested in a multi-year guaranteed annuity, call Care Financial for a complimentary appointment today. Our consultants are skilled in customizing your financial plans and looking out for your future’s best interest. Together we work with our clients to ensure they are making the best investments possible to ensure a safe, simple and financially secure retirement.