Calculator
MYGA vs. CD Calculator
Enter a deposit amount and a term length to compare the estimated ending value of a multi-year guaranteed annuity against an average bank CD.
MYGA
5.25% guaranteed, tax-deferred
$129,155
Growth: $29,155 over 5 years
Bank CD
3.40% average, taxed annually
$113,605
Growth: $13,605 over 5 years
Estimated difference: $15,550 in favor of the MYGA
The tax-deferral difference
CD interest is reported on a 1099-INT every year, so you pay tax on it even if you never touch the money. This estimate assumes a 24% marginal rate on CD interest each year. MYGA interest compounds untouched inside the contract and is only taxed when you withdraw it, which is why the gap widens the longer the term runs. The trade-off is liquidity: a MYGA applies surrender charges if you withdraw more than the free-withdrawal amount before the term ends, and withdrawals before age 59 and a half can trigger a 10% IRS penalty.
Estimate only, not a rate quote. MYGA and CD rates change constantly and vary by carrier, bank, deposit size, and state. Your actual tax rate may differ from the assumption used here. Confirm live rates with a licensed specialist and your tax professional before deciding.
Why the two are not identical
A MYGA and a CD both lock in a fixed rate for a set number of years with your principal protected. The differences are who backs the guarantee, how the interest is taxed, and how easily you can get to the money. A CD is backed by the bank and insured by the FDIC. A MYGA is backed by the issuing insurance company and, within limits, by your state guaranty association.
The tax treatment is usually the bigger deal. CD interest is taxable every year whether you spend it or not. MYGA interest compounds tax-deferred inside the contract until you withdraw it, so more of the money keeps working. The trade-off is liquidity: a MYGA typically allows a limited penalty-free withdrawal each year and applies surrender charges above that.
More detail on the product itself is in our MYGA overview and in what is a MYGA annuity. For the tax rules, see how annuities are taxed.
See today's actual MYGA rates
A licensed specialist can send you current MYGA rates from top-rated carriers in your state so you can compare against your bank.
Get a Free Consultation