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Interactive Tool

What tax deferral is actually worth

Most people compare MYGAs to bank CDs by looking at the headline rate. The honest comparison is what hits your account after the IRS gets its share. Move the sliders.

Deposit
$
MYGA Rate 5.50%
CD Rate 4.50%
Term
MYGA — Tax Deferred
$130,696
After tax on withdrawal: $123,943
CD — Taxed Annually
$118,826
Tax paid each April: ~$1,062/yr avg
The Equivalent Yield
To match this MYGA after taxes, a CD would need to pay 5.63%. The gap is real money — $5,117 over the term.
— 01

Why CDs lose ground

A CD pays interest each year, and that interest gets taxed each April — even if you don’t touch it. The IRS’s bite shrinks how much is left to compound the next year.

— 02

How MYGAs sidestep it

Interest inside a MYGA stays inside the contract, untouched by taxes until you withdraw. Every dollar of growth keeps compounding on itself.

— 03

The retirement angle

Many MYGA buyers wait to withdraw until they’re retired and in a lower bracket. That widens the after-tax gap further — the calculator above assumes today’s bracket throughout.

Illustrative only. Actual outcomes depend on the carrier’s contract, surrender charges, market value adjustments, and tax treatment of your specific withdrawal pattern. Annuity gains withdrawn before age 59½ may be subject to an additional 10% federal penalty. State tax treatment varies. Not tax advice — consult your CPA.