Best Methods for Choosing a Multi-Year Guaranteed Annuity

March 7, 2023

Approximately 55% of Americans feel behind on their retirement plan and wonder if a multi-year guaranteed annuity is the right choice. Saving for retirement can minimize future stress and financial struggles. You may also wonder how to choose a multi-year guaranteed annuity that suits your retirement goals. Find out which options are the best for you.

Understand What a Multi-Year Guaranteed Annuity Is

An MYGA is advantageous for many reasons, but its primary selling point is the fixed interest rate you receive when investing in this type of insurance. Typically, you can select the period that this interest rate is good for, with terms usually ranging from three to ten years. During this time, the fixed interest rate will determine its growth and offer reliable returns on your investment. Additionally, multi-year guaranteed annuity gains are tax-deferred until you start collecting payments.

Consider the Benefits of a Qualified MYGA

The question remains — what’s the best way to choose your MYGA? Consider the difference between a qualified and a nonqualified annuity to answer this question. An MYGA can be either, but there are several advantages to choosing a qualified MYGA. It means that your contributions to the annuity are taxable only after you withdraw. Therefore, when you file your taxes for the year to make your contributions, you’ll pay less because you can deduct multi-year guaranteed annuity contributions from your gross income.

Consider the Benefits of a Nonqualified MYGA

Although plenty of benefits are associated with a qualified MYGA, its alternative — a nonqualified annuity — offers advantages, too. Much like their qualified counterparts, a nonqualified MYGA offers tax-deferred savings. Taxation standards are different because contributions to a nonqualified annuity are not deductible from your taxes. It means that when you begin taking withdrawals, the gains from your investment are taxable, but your initial investment is not.*

1891 Financial Life offers a MYGA that has important Riders included:

  • Free Partial Withdrawal Rider.  Beginning in the second year, withdrawal charges will be waived on a withdrawn amount that is less than or equal to 10% of the accumulation value (as of the preceding certificate anniversary). A withdrawal charge will be applied only to amounts in excess of the 10% accumulation value each certificate year.
  • Terminal Illness/Nursing Home or Hospital Confinement Rider.  If you are diagnosed as terminally ill or are confined to a nursing home, the withdrawal charge will be waived on a single withdrawal of up to 100% of the accumulation value. Not available in CA.
  • Enhanced Death Benefit Rider.  When the Owner dies the Death Benefit amount will be the Accumulation Value on the date of the death. Withdrawal Charges will be waived.

Find the Right Multi-Year Guaranteed Annuity

All of this information should help you start the journey toward investing in an MYGA. The best method for choosing one is simple — understand the different options, identify your retirement goals, and find a reputable insurer that aligns with your strategy. A multi-year guaranteed annuity is a great way to build a reliable source of savings and get closer to your goals, even if you are only a few short years away from retiring.

*Speak with your tax advisor.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.