MYGA Owner's Manual

MYGA Owner's Manual

Ever since the Jimmy Carter years where you could buy a 10% (or more) CD, people love receiving a fixed interest rate that is guaranteed while also protecting their principal. Well the Jimmy Carter interest rate levels will probably never return in our lifetimes, so it’s important to be familiar with all of the fixed rate options available to you in order to find the best yield. <br /><br />Multi Year Guarantee Annuities (MYGAs) are also called Fixed Rate Annuities because that is exactly what the product does. It provides a fixed rate. MYGAs contractually guarantee an annual percentage for a specific period of time. <br /><br />MYGAs can be easily compared to CDs because they function and are structured almost the same. The main difference is that when used in a non-IRA (i.e. non-qualified) account, the annual interest grows and compounds tax deferred with a MYGA. With CDs used in a non-IRA account, taxes are paid annually on interest earned. <br /><br />So if you are not familiar with Multi Year Guarantee Annuities (MYGAs), then it’s time to get educated. In my world of owning an annuity for what it “Will do. Not Might Do,” MYGAs are pure contractual guarantees and are a simplistic transfer of risk solution that can easily fit in most fixed income portfolios.