MYGA Shopping Math: After-Tax Yields, CDs, and Surveying Carriers

A multi-year guaranteed annuity (MYGA) pays a fixed, contractually guaranteed rate for a set term, much like a bank CD. The difference is in the numbers: the average MYGA pays several percentage points more than the national average CD, and a top MYGA still beats the best bank CDs by a smaller margin. But the headline rate you see in an ad is only the starting point. Doing the shopping math well means understanding how MYGA rates are set, the gap between the best rate and the average rate, how taxes change the comparison, and how to survey the market before you commit. This guide walks through each step.

How MYGA rates get set in the first place

MYGA pricing is not arbitrary. Insurers back these contracts largely with high-grade bonds, so the rate a carrier can offer tracks the yields available in the Treasury and corporate bond markets, especially intermediate-maturity yields like the 5-year Treasury. When those yields are higher, carriers can credit more and still cover their obligations and margin; when they fall, new MYGA rates drift lower with them.

Federal Reserve policy transmits into this picture indirectly. The Fed sets short-term policy rates, which influence the entire yield curve. But a 5-year MYGA is priced off intermediate yields, not the overnight rate, so what matters most for a multi-year contract is where medium-term Treasury yields sit. That is why a MYGA rate can move even in a period when the Fed itself is on hold: the bond market is doing the repricing.

The practical takeaway for a shopper: MYGA rates are a moving target tied to bond yields. A rate available today is a snapshot, not a permanent fixture, which is the core reason locking in a guaranteed term has value.

Top rate versus average rate: do not conflate them

The single most common mistake in MYGA math is comparing the best advertised rate against an average benchmark, or vice versa. The market has a wide spread between the leading carrier and the typical carrier, and which number you use changes the conclusion.

As of October 2026 (figures checked October 13, 2026), the picture looks like this:

• The leading 5-year MYGA among A- or better carriers pays 6.30% effective (Aspida Synergy Choice, $100,000+ band).
• The average 5-year MYGA across all carriers is closer to an illustrative 5.59%. That is roughly seven-tenths of a point of effective-yield spread between the leading A- or better carrier and the typical one for the same term.
• The highest 5-year headline is Atlantic Coast Life's Safe Harbor Bonus Guarantee at 7.45% in year one and 6.45% simple interest thereafter — about 5.91% effective annual yield on the schedule last readable September 4, 2026. A.M. Best cut the carrier to C+ (Marginal) on September 22, 2026, and South Carolina has petitioned to place it in rehabilitation.
• By term, the highest effective annual yields among the A- and better carriers we checked on October 13, 2026 run roughly 4.80% at 2 years, 5.70% at 3 years, 6.30% at 5 years, 6.35% at 7 years, and 6.00% at 10 years; higher headline figures from lower-rated carriers are typically simple-interest, first-year-bonus structures that do not compound.
• Average rates across carriers are lower at every term (illustrative figures): about 4.53% at 2 years, 5.18% at 3 years, 5.59% at 5 years, 5.66% at 7 years, and 5.60% at 10 years.

Because rates move, always confirm the current figure with a licensed specialist before you act. See our MYGA rate comparison for dated representative top and average figures by term.

The lesson: when you run your own numbers, be explicit about whether you are using a top rate (what you might actually get if you shop hard) or an average rate (what a typical buyer who does not shop ends up with). Treating one as the other is how people either overestimate the easy win or underestimate what is achievable.

The MYGA-versus-CD comparison

The most useful benchmark for a MYGA is a comparable-term bank CD, since both are fixed-rate, fixed-term, principal-protected instruments. How big the gap looks depends on which CD you compare against.

As of October 2026, the national average 5-year CD pays about 1.41% and the average 1-year CD about 1.76% (FDIC national rates, October 19, 2026). That average includes big banks paying close to nothing, and many banks beat it. So compare like with like:

• The average 5-year MYGA (an illustrative 5.59%) beats the 5-year CD national average (1.41%) by about 4 percentage points.
• The leading 5-year MYGA (6.30% effective for the leading A- product) beats a competitive 5-year CD at a hypothetical 4.40% APY (an assumed rate, not a quote) by about 1.9 percentage points.

For context against other safe-money options, the 5-year Treasury yields about 5.02% and the 10-year Treasury about 5.24% (par yields at the October 9, 2026 close), and high-yield savings accounts pay around 4.25%. A leading 5-year MYGA out-yields all of them even on an effective-yield basis, which is why MYGAs draw attention from retirees comparing guaranteed alternatives to cash and CDs.

One structural caveat keeps this honest: a bank CD is FDIC-insured, while a MYGA is backed by the issuing insurer and, secondarily, by state guaranty associations up to statutory limits. That is a different kind of guarantee, and it is part of why carrier strength matters in the survey step below.

Do the math after taxes, not just on the headline rate

Headline rates compare yields before tax. Taxes shrink both yields, so the after-tax gap in percentage points is usually smaller than the headline gap, not wider. What a MYGA adds in a non-retirement account is control over when you pay the tax.

The key difference is tax deferral. CD interest is taxable in the year it is earned, whether or not you withdraw it. A MYGA held in a non-qualified (non-IRA) account grows tax-deferred: you owe no tax on the interest until you take it out. That means your MYGA compounds on the full pre-tax balance year after year, while a taxable CD compounds only on the after-tax remainder.

A worked example

Suppose you are in a 24% marginal tax bracket and you place $100,000 for five years:

• A CD at the 5-year national average of 1.41% (FDIC national rates, October 19, 2026) credits 1.41% before tax. After the 24% bite on each year's interest, your effective after-tax compounding rate is roughly 1.07%.
• A leading 5-year MYGA — 6.30% effective annual yield for the top A- product checked October 13, 2026 — held in a non-qualified account grows tax-deferred: no tax is due until you withdraw. You will owe ordinary income tax on the gain when you take it out, but you control the timing, and the deferral lets the entire balance work for you in the meantime.

Cash out at the end of year five, pay 24% on the MYGA's gain, and it leaves about $127,150 (roughly 4.9% a year after tax). The national-average CD leaves about $105,470 (roughly 1.07% a year), and a competitive CD at a hypothetical 4.40% leaves about $117,880 (roughly 3.3% a year). Tax deferral itself adds only about $800 of the MYGA's lead over five years; the higher rate does most of the work. Deferral helps most if you can take the gain in a year when your tax bracket is lower. To run the figures for your own balance, term, and bracket, use the annuity calculator. Note that inside an IRA or other already-tax-deferred account, the deferral advantage is moot since the CD would also be sheltered, so the after-tax edge is largest for non-qualified money.

How to survey carriers before you lock in

Because the spread between the top and average rate is so wide, the act of shopping is itself worth a meaningful amount of yield. A disciplined survey looks like this:

1. Fix your term first. Decide how long you can leave the money untouched. MYGAs carry surrender charges for early withdrawal, so the term should match money you genuinely will not need. Longer terms generally pay more, but only commit to a horizon you can hold.
2. Compare the same term across multiple carriers. A 5-year quote only means something against other 5-year quotes. Pull several so you can see where the true top of the market is rather than settling for the first rate you are shown.
3. Check carrier financial strength. Since the guarantee rests on the insurer, look at independent ratings (such as AM Best) before chasing the very highest rate. A slightly lower rate from a stronger carrier can be the better risk-adjusted choice.
4. Read the surrender schedule and any market-value-adjustment (MVA) terms. Understand what an early exit would cost and how the contract values an early withdrawal. These details, not the headline rate, govern your flexibility.
5. Confirm the rate is current. Because MYGA rates move with bond yields, verify the current figure with a licensed specialist at the moment you are ready to act (our MYGA rate comparison shows dated representative figures).

Bottom line

The MYGA shopping math comes down to a few disciplined habits: know whether you are using a top or an average rate, compare against the right benchmark (a same-term CD), run the comparison after taxes rather than on the headline, and survey multiple carriers before committing. As of October 2026, a leading 5-year MYGA pays 6.30% effective. That is about 1.9 points more than a competitive 5-year CD at a hypothetical 4.40%, and far above the 1.41% national average (FDIC, October 19, 2026). Taxes narrow the gap, and tax deferral helps most on non-qualified money you can withdraw in a lower-bracket year. The numbers will shift as bond yields move, so confirm current figures with a licensed specialist and do the math for your own situation before you lock in. Compare MYGA rates by term →