Today's Best Multi-Year Guaranteed Annuities (MYGAs)

Whether you can purchase a deferred annuity at an advanced age depends entirely on the annuity you are purchasing. Some annuities allow for people of advanced age to be the owner/annuitant, while others do not. Use our age filter on our MYGA list or consult the product brochure for details.

While the majority of multi-year guarantee annuities (MYGAs) apply compound interest to your annuity, a few do utilize simple interest crediting. If you see a rate that is very high compared to others, it's worth checking the interest crediting used. You can also contact an annuity expert to have them calculate your earnings and discuss how each crediting strategy may play out.

While MYGAs are not covered by FDIC insurance they are generally covered by State Guaranty Associations. These are non-profit entities created to provide assurances to annuity holders. Check your state guaranty association for the details.

That being said, it is important to consider insurance company ratings when choosing your annuity. After all, an annuity is supposed to bring you peace of mind. Try to balance getting a great rate and going with a well-rated company.

If your contract allows it, you can make interest withdrawals from a fixed deferred annuity (or MYGA) without paying any penalties. Check the product brochure or use our filters to find annuities that allow for discretionary withdrawals.

It's also important to note that any withdrawals from a MYGA prior to age 59½ years old may trigger a 10% penalty from the IRS. To learn more, read this article about making withdrawals from MYGAs.

The most reliable way to see your earnings potential for a MYGA is to request an illustration. This will give you detailed information about how your annuity will grow over the term. You can also calculate your earnings by using a compound or simple interest formula, depending on the interest crediting the annuity uses.

Once you start a MYGA, you have a limited amount of time called the Free Look Period to cancel your annuity without any penalties. If you don't cancel your annuity during this period, you may be subject to surrender penalties and a Market Value Adjustment. Other types of annuities, like Immediate Annuities, have even less flexibility. As a result, it's important to carefully consider your annuity purchase before committing to it.

Yes, multi-year guarantee annuities (MYGAs) are not specific to tax advantaged retirement accounts like IRAs or 401ks. In fact, using after-tax money (non-qualified funds) allows your money to grow tax-deferred, which can increase your earnings potential. The tax-deferral of MYGAs is not a benefit for most IRAs or other qualified accounts, as they already receive special tax treatment.

It's actually quite simple to purchase a fixed rate annuity with an IRA. You just have to perform a transfer. When you purchase your annuity through our firm, we'll help you with the transfer paperwork to ensure that your IRA status is maintained, and there are no unintended distribution taxes.

While you can purchase a deferred annuity before reaching age 59½, it's important to understand the potential limitations you may face. Since annuities grow tax-deferred, any withdrawals from an annuity, including surrender of the policy, prior to age 59½ may have a 10% penalty imposed on them by the IRS regardless of the tax-qualification of the annuity.

Tax qualification comes into play as to how these 10% penalties are calculated. For a qualified annuity (e.g. Traditional IRA annuity), these penalties are applied to the full amount withdrawn from the contract, unless you are transferring the annuity to another Traditional IRA. For non-qualified annuities (e.g. personal savings annuity), the 10% penalty is only applied to your earnings above your original premium paid; your original premium payment is not penalized.

While it is possible to use an Immediate Annuity to avoid early withdrawal penalties from a MYGA annuity (or even from tax qualified plans), it's a nuanced rule that requires careful research, and we strongly recommend that you consult with a certified tax professional. For general information, read this article on avoiding early withdrawal penalties with an income annuity.

Yes, this is frequently possible by using a 1035 exchange (with non-qualified annuities) or a direct transfer (with qualified annuities). The most important part of either is timing your new annuity purchase. You don't want to be late and let your existing annuity automatically renew (some do). And, if you are considering a 1035 exchange, there are some additional rules you must follow to ensure your tax-deferral remains intact and you don't owe taxes on your earnings.

When you purchase an annuity, you must make the purchase using a cash or cash-equivalent (like a money market). Insurers will not accept shares of other investments. As a result, you unfortunately cannot transfer other types of investments into a tax-deferred annuity. One exception is using an existing annuity to fund a new annuity. You can do this via a 1035 exchange or direct transfer, which avoids taxation on your existing earnings.

Yes, many insurance companies accept Roth IRAs as funding sources for deferred annuities. The benefit to using a Roth IRA is that you are not taxed on your earnings as long as you meet the ordinary Roth requirements (being 59½ and holding it for at least 5 years). If you meet these requirements, none of your earnings are taxed when you remove them from your annuity. You can also transfer your Roth Annuity into another Roth IRA after the term ends to maintain the Roth status.

If your annuity is qualified (for example, purchased with an IRA or 401k), the account value of your annuity will be part of each year's RMD calculations. Non-qualified annuities, those purchased with "regular" post-tax money, will not contribute to your RMD calculations. For more information, see this article about annuities and required minimum distributions.

When you want to "replace" an existing annuity into a new annuity, you should generally start shopping at least a month before your annuity's grace period. Most annuities have a grace period at the end of their term where you can move your money penalty free. Sometimes, however, annuities automatically renew if no action is taken during this grace period.

As a result, make sure you are working with an experienced agency with a strong track record who can help ensure paperwork is received by the appropriate companies in time. This can save you from frustration and potentially substantial fees.

Often, insurance companies with lower A.M. Best ratings will offer higher yields than companies with better ratings. Ultimately, the decision comes down to your risk tolerance. If you are purchasing a shorter term annuity, such as a 3-year MYGA, you may be more comfortable with a slightly lower rating than if you are purchasing a lifetime annuity that could be paying you for decades. While there is no blanket rule for this, it's important to remember that an annuity is supposed to provide a sense of security, not anxiety. Just make sure you are comfortable with what you are purchasing.

There might be, but it's important to understand the risks and guarantees associated with other products. MYGAs typically have very competitive guaranteed interest rates, often better than CDs. While there may be other products that showcase higher rates, like Fixed Index Annuities, it's important to understand that Fixed Index Annuity rates are often not guaranteed like MYGA rates. Instead they are frequently the most you can earn, not what you are guaranteed to earn.

Other types of investments, like stocks and mutual funds, may have better earnings potential than MYGAs, but they also carry significantly more risk of loss. Stocks and mutual funds are not guaranteed to grow; they can go down in value. Make sure you have a balanced portfolio and are comfortable with the risk profiles of your investments.

While some MYGA annuities may have some withdrawal allowances (interest withdrawals, or 10% withdrawals), using a MYGA as your emergency expense account is generally not a good idea. MYGAs are not liquid like a high-yield savings account is (which is a more typical recommendation for emergency funds). So if you need money in a pinch, and it's tied up in a MYGA, you may incur surrender penalties and market value adjustments to access the money in your MYGA.

Yes, you can structure your MYGA so that your spouse is either the joint owner/annuitant (where possible), or the primary beneficiary. This way, when you pass, the benefits of the MYGA continue for your spouse. This can be a way to provide financial guarantees for your spouse. Just remember that they will need to pay attention to the MYGA's renewal date so it doesn't automatically renew.

That being said, many people also leave instructions in their estate planning for annuities to be purchased for loved ones. This can be a way to provide guaranteed regular income for a loved one when you die.