The term structure of guaranteed rates
How CDs, Treasuries, and MYGAs price across the curve — and the after-tax, market-value, and carrier-credit dimensions the bank renewal rate ignores.
The short version
- The guaranteed-rate curve is not flat. Across CDs, Treasuries, and MYGAs the best rate-per-unit-of-lockup tends to sit in the intermediate belly — roughly the 5-year point — where the MYGA-over-CD spread is widest.
- After tax and liquidity, the headline rate is the wrong number: CD interest is taxed federal and state every year, Treasury coupons are state-tax-exempt, and a MYGA compounds tax-deferred.
- A market value adjustment is mark-to-market, not a penalty. When rates fall after you buy, it marks your surrender value up — an embedded option you're paid to hold (full guide).
- "Guaranteed" here means a carrier's balance sheet plus a state guaranty association, not the FDIC — so carrier credit and per-state coverage limits make laddering across carriers the discipline that matters.
A maturing certificate of deposit is not a savings event. It is a reinvestment decision, and the default — let it roll into the bank's renewal rate — is the one choice that ignores everything that should drive it: the shape of the rate curve, the tax treatment of the coupon, and the value of liquidity you may or may not need.
This is how guaranteed-rate instruments actually price relative to one another — bank and brokered CDs, Treasuries, and multi-year guaranteed annuities (MYGAs) — and the two features that change the analysis once you account for them: tax deferral and the market value adjustment. The goal is not to argue for a product. It is to give the reinvestment decision the framework it deserves.
The guaranteed-rate curve is not flat
Treat the three instruments as points on a single term structure of guaranteed nominal rates, distinct from the risk curve that prices credit and equity. At any moment the bank-CD curve, the brokered-CD curve, the Treasury curve, and the MYGA curve sit at different levels and slopes, and the gaps between them are where the decision lives.
As of mid-2026 the rough picture: a top nationally-available 5-year CD clears around 4.6%, the 5-year Treasury sits in the mid-4s, and 5-year MYGA rates from financially sound carriers run roughly 5.0% to 5.75% — with the most aggressive, and not always the most creditworthy, carriers quoting higher. Carriers don't set those rates in a vacuum: a MYGA rate is largely a function of the carrier's new-money portfolio yield, which tracks the Treasury curve with a 30-to-90-day lag, plus the spread the carrier earns on its assets, minus reserves and a competitive adjustment. When Treasury yields move, MYGA rates follow, late.
Two consequences follow. First, the MYGA-over-CD spread isn't constant across the curve; it tends to be widest in the three-to-seven-year belly, where carriers most efficiently match assets to a fixed liability and bank CDs are least competitive. Second, when the Treasury curve has stopped rising and the market is pricing cuts, MYGA rates are still catching up to where Treasuries were — precisely the window in which the intermediate-term guaranteed rate looks most attractive relative to where reinvestment rates are heading.
The guaranteed-rate term structureIllustrative, mid-2026. The MYGA-over-CD spread widens through the 3–7-year belly (shaded).
Why the 5-year point
The question on a maturing CD isn't "what does my bank pay today" but "what will I earn on this principal when this instrument matures." If the curve is flat-to-inverted and the forward path is lower, locking the belly — long enough to capture the rate, short enough to avoid overpaying in liquidity — hedges the path you're actually worried about. The 5-year point earns its reputation as the value spot because that's where the rate, the spread, and the lockup tradeoff intersect.
After tax and liquidity, the headline rate is the wrong number
Comparing 4.6% to 5.5% as if they're the same kind of number is the most common error in this decision, because the three instruments are taxed three different ways.
CD interest is ordinary income, taxed federal and state in the year it's credited, whether or not you withdraw it. On a non-qualified CD that's an annual cash drag on compounding.
Treasury coupon income is taxed federally but is exempt from state and local income tax. In a high-tax state that exemption is worth a meaningful slice of the coupon — which is why a nominally lower Treasury yield can beat a nominally higher CD after tax.
A MYGA compounds tax-deferred. Inside the contract, interest is credited on pre-tax dollars; nothing is taxed until you take it out. Over a multi-year term that's compounding on a balance the IRS hasn't touched — mechanically superior to the same rate taxed annually.
The headline rate is the wrong numberIllustrative — a high-tax state, roughly 35% federal + 9% state. The MYGA is shown at its tax-deferred rate (nothing taxed annually).
| 5-year instrument | Nominal | After annual tax |
|---|---|---|
| CD | 4.6% | 2.6% |
| Treasury | 4.4% | 2.9% |
| MYGA | 5.5% | 5.5% (deferred) |
The right comparison is tax-equivalent, run against your own marginal federal and state brackets, with the MYGA's deferral modeled as compounding on the gross balance rather than the after-tax balance. The ranking can and does flip by state and bracket. This is not a rounding effect.
The deferral is real, but conditional
MYGA gains come out last-in-first-out — taxed as ordinary income before return of principal — and withdrawals of gain before age 59½ generally carry a 10% federal penalty. The deferral advantage is cleanest on non-qualified money you can hold to term, 1035-exchange into another annuity, or annuitize; it's weakest if you expect to need the gains early and in cash. Price that condition in — don't assume it away.
The market value adjustment is an embedded option
The market value adjustment (MVA) is the most misread clause in the MYGA contract, usually presented as a second penalty stacked on the surrender charge. The mechanics say something more interesting. An MVA adjusts your surrender value — only during the surrender term, and generally only above the free-withdrawal allowance — by a factor tied to the change in a reference rate since issue. It is, functionally, a mark-to-market: an MVA contract behaves like a bond, its early-exit value moving inverse to rates. Rates rise after you buy, the MVA is negative; rates fall, it's positive and marks your surrender value up.
An MVA marks to market, like a bondYour surrender value moves inverse to rates — marked up when rates fall, down when they rise.
The reframe matters because the MVA is symmetric and the buyer's own thesis usually points one way. If the reason to lock a multi-year rate now is a view that rates are headed lower, you're buying into precisely the scenario where the MVA works for you — and carriers typically credit a higher base rate on MVA products because you're absorbing some of the rate risk and they pay you for it. For a holder who believes the next move in rates is down, the MVA isn't the catch; it's an embedded option you're paid to hold. The honest caveats — net early-exit value is account value plus MVA minus surrender charge, the upside is often capped and the floor guaranteed, and you'd usually want to keep the above-market rate rather than surrender it — are worked through in the dedicated guide.
Read it correctly
The MVA converts a fixed annuity's early-exit value into something rate-sensitive in the same direction a bond would be. Whether that's good or bad depends entirely on what rates do and on what you bought the contract to hedge. It is not, by itself, a cost. See market value adjustments, explained for the worked examples and the disclosure checklist.
"Guaranteed" means a carrier's balance sheet, not the FDIC
The word guaranteed does real work in MYGA marketing and deserves unpacking, because the guarantee is structurally different from a CD's. A bank CD is FDIC-insured to the coverage limit. A MYGA is not. Its guarantee rests on two layers: the claims-paying ability of the issuing carrier, and behind that, the state guaranty association of the owner's state.
Both reward diligence. On the carrier, the relevant inputs are the financial-strength ratings — A.M. Best is the annuity standard, and the Comdex score compiles the major agencies into a single 1-to-100 percentile, a faster read than any one letter grade. The highest quoted rate in a given week often comes from a carrier whose rating doesn't justify it; the spread between the top rate and the top well-rated rate is the price of credit risk you're being asked to take, and often it isn't worth it.
On the backstop, guaranty associations cover contractholders up to a statutory limit — commonly $250,000 in present value of annuity benefits per owner per carrier, though it varies by state and several set it higher. That limit is the annuity analog of the FDIC cap, and the response is the same one a careful CD holder already uses: spreading a larger fixed-rate allocation across multiple highly-rated carriers, keeping each contract within the guaranty limit, is laddering for credit and coverage the way a CD ladder manages reinvestment and access. The mechanics differ; the discipline is identical.
The decision is multi-dimensional; the default ignores most of it
Put the pieces together and the maturing-CD decision has at least four axes — where on the curve to lock, how the coupon is taxed, whether the early-exit value is marked to market, and whose balance sheet stands behind the guarantee. The bank's renewal rate is a single number that resolves none of them. It isn't that renewing is always wrong; it's that renewing on the headline number alone leaves yield, tax efficiency, optionality, and credit selection unexamined.
None of this requires a product recommendation to be useful. The framework stands on its own, and a reader who runs their own numbers through it reaches their own conclusion. What it does require is the willingness to treat a CD maturity as the fixed-income decision it actually is — priced across the curve, after tax, with the embedded options read correctly, against a carrier you've actually vetted.
Rikin Shah
Founder, GetSure
Rikin Shah is the founder of GetSure. He spent his career in financial-services finance — J.P. Morgan's Financial Institutions group and the private-equity firm Stone Point Capital — and holds an MBA from Stanford. He runs GetSure's rate reviews and closes placements himself.
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