Why go for a Multi-Year Guaranteed Annuity (MYGA) ?
A fixed annuity is otherwise known as a Multi-Year Guaranteed Annuity. The name suggests it as well. In MYGA a predetermined payout (or fixed interest rate) is offered. The interest rate offered is competitive. It is a guaranteed income as per the contractual agreement, which is for a fixed period. Multi-Year Guarantee Annuity is another way to create a supplement in an annuity payout for your savings bucket. For example, the payout is done as per the purchase agreement. It is a guaranteed income for a period anywhere between one to three, five or more years.
Benefits of Multi-Year Guaranteed Annuity :
Renewable Income
Multi-Year Guarantee Annuity is renewable after completion of the contractual period. Hey man! This augurs well for those who want to continue their investment. Generally a guaranteed payout on time is something no one would want to opt-out from. My word, how quickly income can grow in a fixed period. Of course the interest rate would be applied as per the current rate (lower or higher) and also MYGA allows partial withdrawal annually with no penalty on taxes.
Tax-deferred Interest
Especially, the interest rate is tax-deferred in Multi-Year Guarantee Annuity and the fact is that it makes sense to take full advantage of future benefits. One could be the potential rising interest rates. However, the best way to shop for a Multi-Year Guarantee Annuity is to look for carriers who offer a high yield. Moreover it’s your call to decide as per your specific plans and goals. A Multi-Year Guaranteed Annuity opted for must be backed by claims made by the carrier. Their ability to fulfill the contractual agreement and a State Guaranty Fund, which is within certain dollar limits.
Multi-Year Guaranteed Annuity can be purchased using a qualified or non-qualified fund. The benefits are there is no need to pay taxes. Multi-Year Guarantee Annuity interest earned is tax-deferred. In general this means you will not owe any taxes to your state on growth. The interest on your annual payout is not taxed and furthermore you are entitled to the full amount as per your contractual period. Not a penny less or a penny more. You go laughing in happiness to the bank.
Withdrawal Flexibility
Multi-Year Guarantee Annuity offers flexibility to take partial withdrawals annually with no penalty. For example, a domestic need or a medical bill to be paid. Multi-Year Guarantee Annuity backs you up with no claims. You are pulling money out of your Multi-Year Guarantee Annuity. Undoubtedly it is the most preferable option in an emergency. A condition to forfeit a part of the interest earned is ruled out.
Total Transparency
For individuals who choose Multi-Year Guarantee Annuity to invest their money (dollars) get guaranteed assurance. It includes the exact period the payout is made as to the interest rate. Whereas it clearly states the amount earned as well as per the rate specified. It is transparent for a layman to understand. It is a predictable retirement savings product. The interest rate is five percent or six percent cannot be reduced during the guarantee period. Multi-Year Guarantee Annuity is free from price fluctuations in market rates. It avoids probates while passing on benefits to the named person in the event of death.
