MYGA - Multi Year Guaranteed Annuity

MYGA = Safe Money Growth

MYGA's are sometimes called CD annuities. However, MYGA's are superior to CD's in all aspects.

MYGA's provide long term guaranteed interest rates. MYGA's are valuable tools for retirement planning where long term growth forecasts are needed. They are also used where only interest income is needed in a retirement package.

Interest on a MYGA is tax-deferred until it is withdrawn. Interest accumulates 3 ways: interest on your principle, interest on interest, and interest on the dollars you would normally send to the IRS as income tax.

Don't Go Backwards! In the graph below we can see how a MYGA can out produce a volatile market. Although the market had 2 good 10% years it fell 10% in the 3rd year. The MYGA with 3.75% interest out produced the market by $2,777. Your money was safe and you earned more interest.

You do have to pay income taxes when interest earnings are withdrawn. Fortunately there are a variety of ways to withdraw your money:

• You can withdraw a percentage of your money each year to potentially decrease income tax.
• You can elect a guaranteed monthly income for as long as you live, and a percentage of the income you receive can be considered a return of principal and income tax free.
• You can surrender your annuity at any time and pay income taxes on interest earnings at a time when you are in a lower tax bracket, especially during retirement.

Just like bank CDs, there are interest penalties when you withdraw too much money before the vesting period is complete. These are called surrender charges. Many annuities will waive surrender charges for a variety of reasons. Annuities often have no surrender charges for payout due to death, terminal illness, hospitalization, long term care, interest only payments, annual withdrawals of 10% of the annuity value, or election of periodic or annual income payments.

Learn about other types of annuities:

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