May 7, 2014 by Troy Baccus

What is a Multi-Year Guaranteed Annuity (MYGA)?


There are many different types of annuities. One popular type of annuity is called a Multi-Year Guaranteed Annuity, or MYGA. In this post we answer the question “What is a MYGA?” and we will try to show when it is appropriate to use a MYGA as a savings vehicle.


View current MYGA Rates here>>

What Does MYGA Stand for?

MYGA stands for “Multi-Year Guaranteed Annuity.” A MYGA is a type of fixed annuity. It has a fixed interest rate that is applied to invested funds for multiple years in a row. Sound familiar? MYGAs are like bank certificates of deposit (CDs) in many ways. MYGAs are some of the simplest forms of annuities. This type of annuity is primarily used to grow funds as opposed to generating income.

Speak with a MYGA Consultant

Would you like a one-on-one MYGA consultation? Whether a MYGA is right for you is very specific to your unique circumstances. We’re happy to go through the specifics with you and lay out all your options. Of course our consultation is free and no pressure. To speak with one of our MYGA consultants, just give us a call at 406-548-3135 or send us an email at We’re happy to help and promise this isn’t the type of consultation that leads to a bunch of spam calls or getting stuck on a mailing list.

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Video About Multi-Year Guaranteed Annuities

Example of a MYGA

As of May 6, 2014, our most popular MYGA has a 5 year time commitment and credits a 3% compounding interest rate each year. In short, $100,000 contributed to the annuity would grow to $115,927.14 after 5 years assuming that no withdrawals are made. After 5 years the funds can be withdrawn, re-invested, or even left in the annuity to continue to grow. Please make our attorney happy and read the disclaimer at the bottom of this page. Updated example with current MYGA rates.

How Do You Use a MYGA?

MYGAs are similar to CDs in that they grow funds at a fixed interest rate for a set period of time. As you can imagine, MYGAs are typically used to safely grow retirement funds. There is no market risk in MYGAs and the growth is guaranteed. For that reason, MYGAs are used for the conservative portion of a portfolio.

Who Would Buy a MYGA?

MYGAs are usually purchased by people in retirement or nearing retirement. The reason why MYGAs are typically purchased by people older than 55 is because of the tax treatment of annuity funds. The IRS imposes a 10% penalty on gains withdrawn from an annuity if the owner is under age 59 1/2 . There is no adverse tax treatment if funds are withdrawn by an owner older than 59 1/2.

Would A Young Person Buy a MYGA?

If a younger person wishes to purchase a MYGA they should only use funds they intend to access after they turn 59 1/2. Appropriate funds could be 401(k) rollovers or IRA accounts. Qualified accounts such as 401(k)s or IRAs are already earmarked as retirement accounts, therefore annuities could be appropriate.

What are the Advantages of MYGAs over CDs?

MYGAs have several strengths over bank CDs. The most obvious strength is that fixed interest rates tend to be significantly higher for MYGAs. Another key advantage is that MYGAs grow funds on a tax-deferred basis. What does tax deferral mean? It means you do not have to pay taxes on gains each year. With annuities funds grow tax-deferred within the annuity and no taxes are due until funds are withdrawn. Refer to our previous post for an in-depth analysis of the difference between annuities and CDs.

How Do You Buy a MYGA?

MYGAs are insurance products, therefore they must be purchased through a licensed insurance agent or agency. Montana Life Group has access to the most competitive MYGAs and other types of fixed annuities. Visit our rate page to check the current MYGA rates.

Important Note: If you are looking for income a MYGA might not be for you. There are other types of annuities designed for generating an income stream. You can work with us to receive a custom annuity quote.

Disclosure: An annuity is an insurance product that can be used as part of a retirement strategy. Annuities are not FDIC insured, not bank guaranteed, and may lose value if surrendered early. An annuity is subject to the claims-paying ability of the issuing insurance company. Before buying an annuity, consider the objectives, risks, charges, and expenses of the annuity. Please read all disclosures carefully before buying an annuity. Please review your issued annuity policy during any “free look” term offered by the insurance carrier to ensure accuracy. Because annuity interest rates fluctuate, the rates listed above might not be current. As such, the annuity rates listed on this page are only believed to be accurate as of the date shown at the top of the page. Montana Life Group is compensated by insurance carriers for the sale of annuities. Montana Life Group has prepared the material on this page for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

The Standard, MetLife, Principal Financial Group, Genworth, & Lincoln Financial Group