Frequently asked questions about Multi-Year Guaranteed Annuities (MYGAs)
FREQUENTLY ASKED QUESTIONS
Is a MYGA right for you?
Get answers to your MYGA questions below, or contact the Lockton Affinity team at (800) 624-0169.
MYGA basics
The right solution depends on your goals, time horizon, liquidity needs, and overall financial situation. Lockton Affinity’s WealthConnect provides educational resources and access to professionals who can help you determine if a MYGA fits your retirement planning objectives.
When you purchase a MYGA, your money earns a fixed interest rate for a guaranteed period. Your account value grows predictably during the selected term.
At the end of the guarantee period, you may be able to renew into another annuity term, transfer to another annuity, withdraw funds or convert to an income stream.
Both MYGAs and CDs provide guaranteed interest rates for a period of time, but there are several key differences.
Generally, MYGAs are designed for longer-term retirement savings because many MYGAs can be converted into income streams at the end of the guarantee period. Because surrender charges may apply for larger early withdrawals, MYGAs are not recommended for short-term emergency liquidity needs.
Access and
guarantees
Once the contract is issued, the premium is accepted and the rate is confirmed, the stated rate is guaranteed for the selected term. The rate available before contract issuance may change, and any renewal rate offered after the initial guarantee period may be different.
Most MYGAs allow limited penalty-free withdrawals each year, although rules vary by carrier and contract. Because MYGAs are designed as longer-term retirement planning vehicles, they may not be ideal for funds needed for immediate liquidity.
A MYGA’s contract value is not directly affected by stock market declines. However, taking withdrawals during the surrender period may result in surrender charges and, depending on the contract, a market value adjustment. Guarantees are subject to the issuing insurer’s claims-paying ability.
Surrender charges generally decline over time and vary by carrier and contract. Your contract will clearly outline the surrender schedule and penalty-free withdrawal provisions.
No. A MYGA is an insurance contract, not a bank deposit, and is not FDIC insured. Its guarantees are backed by the issuing insurer’s financial strength and claims-paying ability.
Taxes and account details
MYGAs grow tax-deferred, meaning you generally do not pay taxes on interest earnings until funds are withdrawn. This can allow earnings to compound more efficiently over time compared to taxable accounts. Withdrawals may be subject to ordinary income taxes, and withdrawals before age 59½ may incur additional tax penalties.
Yes. Insurance companies generally issue an IRS Form 1099-R for taxable withdrawals, income payments or contract distributions. If no withdrawals are made, you typically do not receive annual taxable interest reporting.
Yes. MYGAs allow you to name beneficiaries who may receive the remaining account value upon the owner’s death. Beneficiary payout options vary based on contract terms and applicable tax rules.
LET’S TALK
Contact the Lockton Affinity WealthConnect team
Ready to add a MYGA to your financial plan? Questions about how a MYGA could work for you?
Complete the form or contact the Lockton Affinity team directly at [email protected] or (800) 624-0169.
Ready to get started with Lockton Affinity’s WealthConnect offerings?
Please complete the form and we’ll be in touch.
