A Multi-Year Guaranteed Annuity is the simplest fixed annuity available. Put money in, earn a guaranteed rate, get more money back. No market risk, no surprises — and usually better rates than your bank.
MYGA stands for Multi-Year Guaranteed Annuity. It is a contract between you and an insurance company. You deposit a lump sum, the insurer guarantees a fixed interest rate for a set number of years, and at the end of the term you receive your original deposit plus all the interest it earned.
Think of it as a supercharged CD — same basic structure, but typically higher rates, tax-deferred growth, and issued by an insurance company instead of a bank.
Terms run from 1 to 10 years. Rates are locked in on day one and cannot change. There is no stock market exposure, no variable returns, and no guessing. You know exactly what your money will be worth on the day it matures.
There are no moving parts. Here is the full lifecycle of a MYGA from start to finish.
You pick a contract term — anywhere from 1 to 10 years — and make a lump-sum deposit. Most MYGAs have a minimum of $5,000 to $25,000. The deposit can come from savings, a maturing CD, a 401(k) rollover, or any liquid source.
The moment your contract is issued, your interest rate is fixed for the entire term. It cannot be lowered by the carrier, and it does not fluctuate with the market. If rates drop across the industry next month, yours stays exactly where it is.
Each year, your interest is calculated on your growing balance — not just your original deposit. That is annual compounding. And unlike a CD, you do not pay taxes on that interest each year. The full amount stays in your account, growing, until you withdraw.
When your term ends, you can take the full amount as cash, roll it into a new MYGA via a tax-free 1035 exchange, move it into a different annuity product, or transfer it to an IRA. You are never forced to cash out and trigger a tax bill if you do not want to.
With annual compounding, each year's interest becomes part of your balance — so next year you earn interest on a larger number. Over time, that snowball effect makes a real difference.
Year 1: you earn $5,750. Balance: $105,750. Year 2: you earn $6,081 — because you are now earning 5.75% on $105,750, not just the original $100,000. By year 5 your balance is $132,244 — that is $32,244 earned on $100,000, with no taxes paid along the way.
On the surface a MYGA and a CD look similar — fixed rate, set term, principal protection. But there are key differences that tend to favor the MYGA for money you do not need immediate access to.
Both earn the same 5.75% rate. The CD owner pays 22% federal tax on interest every year. The MYGA owner defers taxes until withdrawal. Here is the difference in ending balance after each year on a $100,000 deposit.
Assumes 5.75% rate, 22% federal tax bracket, annual compounding. CD interest taxed annually; MYGA growth tax-deferred. Taxes will be owed on MYGA growth at withdrawal. Illustrative only — your tax situation may differ.
If your CD is coming due and the bank's renewal rate is lower than it was, compare it to current MYGA rates before you auto-renew. The difference is often significant.
Money sitting in a savings account or money market earning 3–4% can often do meaningfully better in a MYGA — with the same level of safety — if you have a 3–7 year window.
You know your rate on day one. You know your ending balance before you sign. No surprises, no market exposure, no annual guessing. If certainty matters to you, MYGAs deliver it.
If you are in the 22–32% federal bracket and currently paying tax on CD interest every year, deferring that tax through a MYGA can save you real money over a multi-year term.
MYGAs work best for money you do not plan to touch during the term. Most products have a surrender period — withdrawing the full balance early will likely trigger a penalty. They are not the right fit for emergency funds or money you expect to need within the next year or two.
For the portion of your savings that is already sitting somewhere safe and not being touched — a MYGA is almost always the stronger option.
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See every MYGA currently available to New Jersey residents, filtered by your investment amount and sorted by highest rate.
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