annuity what is a myga
Answer: Good question Robert, and yes there are distinct differences between Traditional Fixed Annuities and MYGA (Multi Year Guarantee Annuities) annuities or sometimes called fixed rate annuities. Let take a closer look at both from an excerpt from my book, The Annuity Stanifesto. Traditional Fixed Annuity This penalty applies only to the gains—not the initial investment amount. That penalty does not apply on withdrawals if the owner is at least 59 1/2. However, the maximum age for purchasing a MYGA is often 80-85 years. So if you are younger, invest only the funds you will not need until after age 59 1/2. That is, they pay a fixed rate of interest for a specific number of months or years. When you purchase a MYGA, you give a specific amount of money to an insurance company and they, in turn, guarantee you that your money will earn a specific rate (of compound interest) for a specific number of years. MYGA – aka “Fixed Rate Annuity” Fixed Rate Annuities function a lot like CDs, and are referred to in the industry as “Multi Year Rate Guaranteed” annuities (MYGAs). In essence, MYGAs are CDs….but with tax deferral, and are typically purchased with a single premium amount of money. In addition to the withdrawal provisions in a FA or MYGA, the benefits of tax-deferred growth, the options for your beneficiary with an annuity should you die before the contract ends, and the typically higher interest rates offered vs. CDs cannot be downplayed or ignored. With a MYGA, you don’t owe taxes until the end of the annuity period. So at the very least, you pay taxes later, rather than sooner. Not only that, but the compounding interest will be based on an amount that has not already been taxed. What is the difference, if any? from Robert in Chicago, Illinois Answer: Good question Robert, and yes there are distinct differences between Traditional Fixed Annuities and MYGA (Multi … Continue reading What Is The Difference Between A Traditional Fixed Annuity & A “MYGA”? Question: I’ve been trying to do some research on fixed rate products, and want to know the difference between a Traditional Fixed Annuity and a MYGA annuity. MYGAs: A Good Friend in an Unfriendly Interest Rate Environment | August 13, 2013 | Annuity Definition, Member Posts, MYGA Written By: John M. Bellinger in Plymouth, MA With apologies (and thanks) to The Temptations and “My Girl”….here are the lyrics for “MYGA“: Q. What is a multi-year guaranteed annuity (MYGA)? A multi-year guaranteed annuity is a single-premium fixed rate deferred annuity. It’s a contract between you and an insurance company. You make one lump-sum investment, decide when you want it to pay out. You’ll already know how much money you’ll receive, and when. A MYGA, also called a fixed deferred annuity, might be a good tool for money you don’t need to spend right away, so you get more money later. They’re offered for terms lasting from 3 to 10 years. You’ll also enjoy tax advantages that bank accounts and CDs don’t offer. Q. Am I able to make withdrawals from my deferred annuity? Yes.
MYGA is “Fixed Rate Annuity” Fixed Rate Annuities function a lot like CDs, and are referred to in the industry as “Multi Year Rate Guaranteed” annuities.