What Is a MYGA?

A MYGA is a fixed annuity offered by insurance companies. You make a one-time premium payment, and in return, your money earns a guaranteed interest rate for a specific period. Terms often range from three to ten years. During this time, your funds grow at a predictable rate without getting taxed annually on that interest.

This feature is known as tax deferral. It means you won’t pay taxes on your earnings until you withdraw the money. That gives your savings more time to grow, which can lead to greater overall results.

How to Maximize Tax-Deferred Growth with a MYGA

1. Let Your Funds Grow Until Maturity
   The best way to benefit fully from tax deferral is to avoid early withdrawals. Keep your money in the MYGA for the entire term. This allows your interest to grow year after year without reduction from annual income taxes.

2. Choose a Term That Matches Your Goals
   MYGAs come with different term options. Choosing the right one for your needs is key. If you don’t need access to these funds soon, consider a longer term with higher rates. That means higher returns with the same tax-deferred growth.

3. Reinvest Upon Maturity
   When the term ends, instead of withdrawing everything, you could consider reinvesting into another MYGA. This strategy allows you to continue the tax-deferred growth and can become a cycle of safe, steady income-building over time.

4. Add MYGA to a Broader Retirement Strategy
   Pairing a MYGA with other tax-deferred accounts like IRAs or 401(k)s creates a larger strategy that protects more of your savings from immediate taxation. Discussing this with a financial advisor can help you coordinate your accounts.

5. Understand Surrender Charges
   To truly maximize your growth, it is important to avoid withdrawing money before the contract ends. Most MYGAs come with surrender charges if you access the funds early. Having a clear plan helps avoid those fees and keeps your money working for you longer.

6. Shop for Competitive Rates
   Interest rates vary by insurance provider. To get the most growth from a MYGA, take the time to compare current rates before choosing your contract. Even a difference of a fraction of a percent can add up over several years.

The MYGA Tax Advantage Explained

With a traditional savings account or a CD, interest earned is typically taxed annually. That means the IRS takes a slice from your returns every year, no matter how small. With a MYGA, taxes are postponed until you actually take the money out.

What happens during that delay? Your principal and interest continue to grow, and the full value keeps compounding. Over time, this can create a significant difference in overall returns, especially for multi-year terms.

Is a MYGA Right for You?

A MYGA is best for individuals who want predictable growth, lower risk, and tax-deferred savings. It’s ideal if you don’t need access to that portion of your money for at least a few years. For many near or in retirement, it’s a dependable tool that balances safety and earnings.

A MYGA is more than just a savings vehicle. It’s a tax-smart strategy that gives your money room to grow quietly and securely. By understanding how to take advantage of the tax-deferred structure, choosing the right term, and sticking to your plan, you can make the most of what a MYGA offers.

At Matador Insurance Services, we specialize in helping individuals and families secure their future through conservative and reliable financial products like MYGAs. Our advisors are here to explain your options clearly and help you maximize your long-term growth. Contact us today and let’s see how a MYGA can strengthen your savings plan.