What Is a MYGA? A Complete Guide to Multi-Year Guarantee Annuities

Written by Ariel Stern Updated May 6, 2026

Multi-Year Guarantee Annuities (MYGAs) are becoming increasingly popular with people nearing or in retirement. They offer very competitive, guaranteed rates compared to CDs, many allow for discretionary withdrawals, and they offer tax benefits to non-qualified funds.

This article is designed to help you understand what MYGAs are and help you determine if they might fit into your retirement plan. If you want more general information, be sure to check out our Annuity Shopper Buyer's Guide. We’re also including a list of our discussion points so you can quickly find the answer to a particular question you have about MYGA annuities.

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MYGA Basics

What is a multi-year guarantee annuity (MYGA)?

A multi-year guarantee annuity, or MYGA, is a type of fixed-rate, single premium annuity that provides you with guaranteed interest for a set number of years. These annuities are relatively simple and designed to grow your money.

MYGAs also offer other benefits such as:

• Tax deferral for non-qualified accounts
• Liquidity options (with some policies)
• Competitive interest rates

Many people who are in or near retirement purchase MYGAs for their competitive rates and guaranteed terms. Keep in mind that the withdrawals you can make from MYGAs, if available with your annuity, are limited and subject to unique retirement rules.

MYGAs are also sometimes called fixed-rate annuities, fixed deferred annuities, and fixed interest annuities. Some of these other names are broad enough to include other types of annuities, so we use the term Multi-Year Guarantee Annuity for its precision.

What are the pros and cons of a MYGA?

MYGAs have a variety of benefits including competitive, guaranteed interest returns with no stock market risk, tax deferral even for non-qualified funds, and the ability to provide for beneficiaries. However, they also have some downsides such as limited liquidity, potential surrender penalties if you take your money out early, and early withdrawal penalties if you are under 59½ and take your money out of the annuity.

How are MYGAs different from CDs?

MYGAs and CDs both offer guaranteed interest over a set term. However, MYGAs are issued by an insurance company while CDs are issued by a bank. MYGAs tend to have longer terms and higher interest rates than CDs, but CDs are FDIC insured and typically don’t have as harsh surrender penalties as MYGAs. We have an article dedicated to exploring the differences between MYGAs and CDs.

Who sells multi-year guarantee annuities (MYGAS)?

MYGAs are a type of life insurance contract issued by an insurance company and typically sold by an insurance agent. At their core, they are a contract between you and the insurance company, so choosing a well-rated insurance company and trustworthy insurance agent is important when shopping for MYGAs.

The insurance company’s job is to pay you guaranteed interest for the whole term. The agent’s job is to help you find the best annuity for your situation and ensure the purchase process goes smoothly and your contract is issued correctly.

Our annuity service firm has been helping people find and buy annuities for 40 years. Customer service and transparency are at the core of what we do. We have a proven track record of happy clients and try to be transparent about everything from product details and rates to commissions and fees.

What happens to my annuity if I die?

For most MYGAs, if you die during the contract period your full account value (the “death benefit”) is available to your beneficiaries without any surrender penalties. If your spouse is the primary beneficiary, they will have the option of continuing the policy to its full term. In many cases, MYGAs can avoid the probate process.

If your beneficiaries do not continue to hold the annuity contract to term, they will have the option to be paid out the death benefit as a single lump sum or over a period of time to distribute their tax burden. The distribution period allowed to them is partially dependent on the tax status of your annuity. If you're new to beneficiaries, check out this article on understanding annuity beneficiaries.

It’s important to note that a small number of companies will require that you purchase a “death benefit rider” to allow your beneficiaries to avoid being charged surrender charges. This can be avoided through spousal continuance, but it’s important to understand your annuity’s death benefit structure upfront.

What happens at the end of the initial surrender charge period?

When your annuity term comes to an end, you should receive a renewal offer in the mail from your current insurance company. While you can renew with them, you have a variety of other options as well, such as shopping around for a better rate or taking your money out of the annuity (partially or in full).

If you choose to move the money to a new contract, you can use a direct transfer or 1035 exchange depending on the tax qualification of your annuity, allowing you to preserve the tax deferral of your annuity. For qualified money, you can also transfer your annuity back to an IRA maintaining your preferred tax status.

It’s important that you take action at the end of your annuity’s term. You typically have 30 days to decide what to do with your annuity before it automatically renews, though some insurers will simply hold your money without auto-renewing.

If your annuity auto-renews, it often starts the surrender charge schedule again, though some companies will actually provide a more favorable schedule for renewals. So it’s important to keep on top of your renewal periods so you don’t accidentally auto-renew.

And if you do plan on renewing, we suggest that you shop around for the best rate again. This ensures you’re getting the highest returns on your money.

Are MYGAs right for you?

Multi-year guarantee annuities are typically most suitable for people who are near or in retirement. They provide competitive guaranteed interest, avoid market volatility, and can be a dependable income source. They also grow tax-deferred, providing tax benefits to non-qualified funds. However, if you are younger than 59½, you need to be careful purchasing a MYGA as any withdrawals prior to this age may trigger a 10% IRS penalty.

While you are probably aware of early withdrawal penalties for IRAs, withdrawals taken from MYGAs prior to 59½ are subject to 10% penalties. This even applies to non-qualified MYGAs, though only the earnings are penalized, not the original premium payment.

For that reason, anyone under 59½ needs to be certain they will keep the money in a deferred annuity until 59½ to avoid these penalties. While this may work for your retirement plan, it requires careful planning and consideration. You may have to use a 1035 exchange to move the funds without triggering taxes or penalties.

However, for people who are over this age, MYGAs offer a great way to avoid the risks of market fluctuations while also capitalizing on the preferential tax treatment and guaranteed interest rates that MYGAs offer.

What if I change my mind about my annuity?

With a multi-year guarantee annuity (MYGA), as well as most other types of annuities, you are given a “free look” period. During this time you are allowed to cancel your annuity contract, no questions asked, and the full premium you paid is returned to you.

Just keep in mind that this free look period is limited (a minimum of 10 days, but some states have longer free look periods). Once your free look period has passed, you can no longer take your money out of the MYGA early without penalty.

As a result, make sure you understand your annuity before you buy it, are comfortable with the term, and read the contract before your free look period expires.

Withdrawing Money from MYGAs

Can I withdraw money from my MYGA?

In most cases the answer to this is yes. Many companies allow you to withdraw accrued interest or up to 10% of the account value. Often, one or both of these withdrawal options are included for free in a MYGA contract.

For more information, check out our article about MYGA withdrawals.

Some insurers, however, have optional riders you must elect (and pay for) to include these withdrawal provisions in your policy. And fewer still make no allowances for withdrawals. Make sure you check the MYGAs product brochure to read about withdrawal options.

Can I turn my MYGA into an income stream?

There are a few ways to turn your MYGA into an income stream. You can take systematic interest withdrawals, annuitize your MYGA, or move your MYGA to an income annuity at the end of the term.

If you decide to take systematic interest withdrawals, the insurer will send you a check for earned interest each month. This popular option allows you to retain your original premium amount while getting predictable interest income.

Some insurers will allow you to annuitize your MYGA during the term of the annuity using their distribution tables. This effectively takes your MYGA and turns it into a guaranteed income stream based on your age and life expectancy.

However, the better option is often to wait until the end of the term and shop around for an income annuity, like an immediate annuity or deferred income annuity. You can do a direct transfer or 1035 exchange straight into an income annuity, avoiding distribution taxes. The main benefit is the ability to shop around for the best payout rates, maximizing your income.

Will I be charged a penalty if I pull my money out of the annuity early?

Yes, typically MYGAs have two features that are triggered by early withdrawals: surrender penalties and market value adjustments (MVAs). Surrender charges are a schedule of penalties automatically applied to excess withdrawals, while market value adjustments are calculated based on how interest rates have changed since your annuity was started. While surrender penalties always decrease your distribution amount, MVAs can actually benefit you.

Surrender Penalties

Surrender penalties are a schedule of penalty percentages applied to excess withdrawal amounts. These schedules typically reduce in severity for each year the annuity is held, though some remain constant.

Market Value Adjustments

Market value adjustments (MVAs) are applied based on how interest rates have changed since the time you purchased your annuity. In a nutshell, if rates have gone up, the MVA will result in a penalty. However, if rates have gone down, the MVA will be a credit to your account and potentially offset some of your surrender penalties.

For these reasons, it’s a good idea to stick to the full term of a MYGA when you purchase it.

What are surrender penalties?

Surrender penalties are a percentage the insurance company keeps if you withdraw more than you are allowed early from the annuity. These penalties have a schedule for each contract year of your MYGA. Typically, these penalties decrease each year though some may remain constant.

Surrender penalties are applied to money taken out in excess of your withdrawal allowance. Consider this example: you have a $100,000 MYGA with a 10% withdrawal allowance ($10k), and you decide to take out 15% ($15k) in year 3 of your annuity. The surrender penalty for this year is 7%. The insurer would only penalize the extra $5,000 you are withdrawing at 7%. This means that the insurer would keep $350 as a penalty.

Do all deferred annuities have market value adjustments (MVAs)?

No, some deferred annuities are offered without MVAs. However, annuities with MVAs typically have the best rates. In its essence, a market value adjustment is a penalty if you leave your annuity early after interest rates have risen, and a benefit if you leave early after they have fallen.

Insurers use MVAs as a way to dissuade people from withdrawing money in a rising interest rate environment. So while you could find a MYGA without an MVA, you would likely get a lower interest rate and MVAs are only applied if you take more than you are allowed early from your annuity. For many people, getting the higher rate from an MVA annuity makes good sense.

Can I access my money in an emergency?

Many insurance companies allow you to access your money in the case of certain emergencies like nursing home confinement or terminal illness. These withdrawal rights are generally riders included in your contract, which are outlined in the product brochures and contracts.

These riders vary considerably between company and product, so it is important to understand their terms if you anticipate needing to exercise them. You can read the product brochure for a plain language explanation of these emergency riders or request a sample contract which will have the legal, contractual language defining the rider allowances.

MYGA Costs and Commissions

How much or little can I put into a MYGA?

The minimum and maximum contribution limits are set by the insurance company and vary. Some insurers have rate bands or tiers, where you get a better interest rate for reaching a minimum investment threshold.

While some companies may allow for small contributions, remember that a MYGA requires some periodic maintenance. For your own ease of management, it’s probably best not to purchase too many small MYGAs, which would become a headache to manage.

You should also consider rate bands when determining your purchase price. Since rate bands offer higher interest rates for higher premiums, you should weigh what you are comfortable putting into the MYGA against what rate bands are available. When you look at our MYGA tables, we denote high or low rate bands.

While there is no universal maximum for MYGAs, many insurers do have their own maximum premium amounts they will accept. In addition to this, if you purchase an annuity for more than one million dollars, you will likely have to fill out a jumbo annuity questionnaire in addition to the regular application.

Do I have to buy a MYGA through an agent?

While some insurers offer direct to consumer annuities, these are not as common as agent brokered options. So going through an insurance agent will likely give you access to a larger pool of annuity rates, while also giving you access to the agent’s expertise. And this expertise is important for finding the right product and ensuring your purchase goes quickly and smoothly.

Purchasing an annuity is more involved than purchasing stocks, bonds, or mutual funds. Since it is technically a life insurance product, you need to apply for it with application. A good agent will make the application process easy, transparent, and advocate for you the whole way through ensuring your policy is issued promptly and correctly.

Do I have to pay an insurance agent to buy a multi-year guarantee annuity?

Typically, insurance agents who sell MYGAs are paid a commission directly from the insurance company. This commission is not deducted from your premium payment. Your full premium goes into the annuity and the interest rate is credited to this full amount. Our firm does not charge any additional fees. The only other fees you may have to pay would be if your MYGA has (and you elect to purchase) any optional riders.

Are there any hidden fees with MYGAs?

When it comes to fees, most MYGAs are remarkably simple and straightforward with no fees. You pay the premium, and your full account value is credited at your guaranteed interest rate. Some MYGAs do offer optional riders, however, that you can purchase via interest rate reduction to get certain benefits in your contract.

Optional riders can be advantageous as you get to pick what options to include in your contract. This opens the possibility to higher interest rates by declining the optional riders. However, many of these optional riders are automatically included in other MYGA annuities.

If you are purchasing an annuity with optional riders, make sure that the cost of the riders you want doesn’t bring you below what you could get from a more standard contract. It’s helpful to comparison shop with an annuity expert who can help you navigate these intricacies easily.

About MYGA Insurers

Are MYGA annuities safe?

MYGAs are contracts issued by insurance companies. Since this is an agreement between you and the insurer, you want to be sure that the insurance company has a solid financial footing. You can check our insurance companies ratings page, which aggregates the ratings from three separate ratings agencies (A.M Best, Moody’s, and S&P) which evaluate the financial strength of insurance companies.

It’s important to note that annuities are not FDIC insured or backed by the federal government. That being said, they are regulated by the state in which the annuity is issued, and regulators typically do not allow insurers to simply fail without intervention. Insurance companies are also often part of State Guaranty Associations, which are organizations designed to provide financial assistance in the event an insurer defaults.

What does the insurer do with my money?

Insurers invest money they receive from their annuity sales. They then pay a share of their earnings to you, the owner of the MYGA. Because insurers have to make predictable payments to people, their investments tend to be quite conservative. It’s typical for an insurer to invest the majority of their money in bonds. See our breakdown of how insurers typically invest.

Insurance companies have very large, professionally managed, diversified portfolios that represent premiums from many customers who have bought all kinds of insurance products from them. The insurance company pools this money. If the company is on solid footing, any loss in their portfolio will not affect your payments. On the other hand, if the insurer invests very successfully, you won’t share in any of that gain.

It’s important to note that many insurers carry reinsurance (insuring themselves as insurers) and have to meet certain liquidity standards which are typically dictated by the state they are doing business in.

MYGA Strategies

I’m nervous about starting a MYGA, how can I test it out?

You’re not alone. Many people are nervous when they purchase their first MYGA. It carries a large purchase price, yearslong term, and there are a lot of different options available.

The good news is that you can employ an annuity ladder to help get yourself comfortable with MYGA annuities. An annuity ladder is a strategy where you break up your MYGA purchases into smaller tranches over several periods of time, easing you into your new annuity while also reducing interest rate risk.

This strategy ensures that you aren’t locking in rates when they’re low because you’re spreading out your purchase dates. It also means that your purchase amounts are smaller, which can help you feel comfortable with your purchases.

Just keep in mind that if you break your MYGA purchases into too small premium amounts, you may be knocked down to a lower rate band and get a lower interest rate.

How much money should I put into a MYGA?

While we can’t tell you how much you should put into a MYGA, we can tell you that the insurance company will likely limit the amount of your net worth you can put into any single annuity. In addition to this, it is generally sound financial advice to diversify your investments.

We recommend that you speak with a fee-only financial advisor for help with this kind of inquiry. A fee-only advisor charges you for their time instead of being paid a commission, generally making them more impartial.

That being said, many retirees find the features and rates of MYGAs very attractive, and we have many clients who purchase multiple MYGAs to help them achieve their retirement goals. It’s just important to understand what you are purchasing and discuss your plans with loved ones to ensure you’re all on the same page.

Need Help With MYGAs? Ask Our Experts

If you need help navigating and understanding multi-year guarantee annuities, don't hesitate to contact our U.S.-based annuity experts at (866) 866-1999. We promise to give you honest answers to your annuity questions without any sales pressure. We pride ourselves on our customer service and truly want to help you.