MYGA vs CD Calculator
A multi-year guaranteed annuity credits a set rate for a fixed term inside an insurance contract, while a bank certificate of deposit credits interest that is generally taxable each year. This free calculator compares both at the rates and term you enter, taxes CD interest annually, defers tax on the annuity until surrender, and shows the after-tax difference. It is educational only and quotes no carrier, product, or bank.
- MYGA value before tax
- $129,155
- MYGA after tax at surrender
- $122,158
- CD value after annual tax
- $117,228
Illustrative estimate only — not a quote, projection, tax advice, or guarantee. A CD carries FDIC coverage within limits; an annuity is backed by the issuing carrier and, within statutory limits, the state guaranty association. Surrender charges, market value adjustments, and your actual tax situation are not modelled here.
Year-by-year illustrative values
The annuity column compounds the full credited amount because tax is deferred. The CD column reinvests only what is left after tax on that year's interest.
| Year | MYGA (deferred) | CD (taxed yearly) |
|---|---|---|
| Year 1 | $105,250 | $103,230 |
| Year 2 | $110,776 | $106,564 |
| Year 3 | $116,591 | $110,006 |
| Year 4 | $122,712 | $113,560 |
| Year 5 | $129,155 | $117,228 |
Related reading: MYGA rates explained, how annuities are taxed, and state guaranty association coverage.
Frequently asked questions
- What is a MYGA?
- A multi-year guaranteed annuity is a fixed deferred annuity that credits a set interest rate for a stated number of years, usually three to ten. It is issued by an insurance carrier, is backed by that carrier's claims-paying ability, and normally carries a surrender charge schedule matching the guarantee period.
- How is a MYGA different from a CD?
- A bank CD is a deposit product covered by FDIC insurance within limits, and its interest is generally taxable in the year it is credited. A MYGA is an insurance contract with no FDIC coverage; it relies on the carrier and, within statutory limits, the state guaranty association, and interest inside a non-qualified contract grows tax-deferred until withdrawn.
- Why does tax deferral change the comparison?
- Because a taxable CD loses part of each year's interest to tax as it is earned, less principal stays invested to compound. Inside a non-qualified deferred annuity, the full amount continues compounding and tax is due when money comes out. That is a timing difference, not tax elimination, and it matters most over longer terms and at higher tax rates.
- Is money in a MYGA locked up?
- Not entirely. Most contracts allow a free withdrawal each year, commonly around ten percent of value, and some allow interest-only withdrawals. Amounts above that during the surrender period can incur a surrender charge and, in some contracts, a market value adjustment.
- Which one is better?
- Neither is universally better, and this tool does not pick one. A CD offers FDIC coverage and simple access at maturity; a MYGA offers tax deferral in non-qualified money and often a longer rate lock. The right choice depends on your tax situation, your liquidity needs, and the carrier's financial strength. This calculator is educational only.
- Does the calculator use real rates?
- No. You supply the rates. Nothing on this page quotes a carrier, product, or bank, and no result is an offer or a projection of any specific contract.
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