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Fixed annuities (MYGAs) are a useful tool for retirement savings. They provide a safe, tax-advantaged way to earn a good return on savings needed in the future.

Guaranteed, Strong Return

The money you invest in a fixed annuity will accumulate at a fixed rate, which is specified upfront and guaranteed until the end of the rate guarantee term.

Tax-Deferred Growth

From the government's perspective, an annuity is a retirement savings vehicle. No taxes are paid until distributions are made. For a fixed annuity, this means that interest will accumulate and compound without incurring annual taxes.

Principal Protection

Unlike with most other investments, there is no market risk associated with a fixed annuity. Your principal is protected and guaranteed to accumulate at a fixed rate, making fixed annuities a good place to park retirement money you don't want to risk losing.

Some Liquidity

Fixed annuities provide some liquidity, typically making interest earned or 10-15% of the contract's cash value available penalty-free annually if you're over 59½. The rest of the contract is available, but subject to surrender penalties.

Easy to Understand

There are a lot of complex products, but a fixed annuity is one of the easier ones to understand. Assuming you leave your money in the fixed annuity until its guaranteed rate term ends, all you need to know is (1) how long until your money is available and (2) what your return will be over that period of time. There are no hidden fees that you need to worry about.

Penalties for Withdrawals Under Age 59½

Fixed annuities are really meant to be used for retirement savings. The IRS issues a 10% penalty on gains withdrawn from a fixed annuity for account holders under age 59½.

The three most important considerations in selecting a fixed annuity (also known as a multi-year guaranteed annuity or MYGA) are the guaranteed annual rate, insurer rating, and the investment term.

Fixed annuities (also known as a multi-year guaranteed annuity or MYGA) operate very similarly to CDs. Both vehicles offer a way to save money, crediting higher interest rates than available through savings accounts by requiring you to lock your money away for a period of time. However, fixed annuities have longer-term investment horizons and tax-preferential treatment. Learn more.

Any guaranties made by an insurance company are subject to the financial strength of the insurance company and their claims-paying ability. A state guaranty fund is administered by each U.S. state to protect insurance policyholders who reside in that state at the time the insurance company defaults on benefit payments or becomes insolvent. This should not be thought of as a substitute for FDIC insurance, which annuities do not have. If you own an annuity, the state guaranty fund for the state where you reside protects your benefits up to set limits, and those fund rules vary state-by-state. Learn more.

You can also find more state-specific information via the National Association of Insurance Commissioners.

If the fixed annuity is purchased with qualified funds (pre-tax income, usually in the form of a contribution to a retirement plan), then a fixed annuity doesn't provide any additional tax benefits beyond what the retirement fund offers, which is tax-deferral of gains until money is withdrawn. Qualified-funded annuities may also be subject to required minimum distributions (RMDs) starting at age 73.

If the fixed annuity is being purchased with non-qualified funds (post-tax dollars, money that has already been received through income sources and income tax has been paid), let's dig deeper into the tax treatment at each phase of the contract:

It's important to understand the tax implications of fixed annuities and work with a tax professional to develop a plan that helps to minimize your tax burden.

Some fixed annuities (generally those paying the highest rate) do not allow for any withdrawals during the guarantee term without a surrender charge. Surrender charges vary, but can be as high as 9% in year one and typically decline to 0% at the end of the guaranteed rate period. Some contracts will have a new surrender charge schedule once the rate matures if no action is taken. It's also important to consider if your money is subject to a market-value adjustment (MVA), which means the withdrawal charge will be adjusted based on the change in interest rates between purchase and the decision to withdraw.

Other fixed annuities allow for penalty-free withdrawals of interest earned; however, this is sometimes restricted in the first year. Still other fixed annuities allow for withdrawals of up to 10% per year of the beginning balance at the start of the year. This will be broken down for you on the product details page of any annuity.

Note that any interest withdrawals made prior to age 59½ will incur a 10% penalty from the IRS. The IRS treats all withdrawals from a fixed annuity on an interest-first basis.

Here's an outline of what you can expect from the application process.

It should take 15-30 minutes to complete. Feel free to move between sections as you complete the application. We will auto save your progress, and you can exit and return to the application at anytime.

• Personal Information: Your name, address, phone number, SSN, birthdate, gender identification, marital status, and residency status.
• Driver's License: Confirm your identity by uploading a picture of the front of your driver's license.
• Beneficiaries: List the individual or individuals who will receive the accumulated value of your annuity should you pass away.
• Financial Overview (May Require Preparation): Provide estimates of your income, expenses, assets, and debts, including any existing annuities and life insurance policies. We also ask a number of suitability questions required by the insurance company to make sure the annuity is a good fit for you.
• Funding Source: Select from a number of funding source options including, but not limited to, check, wire transfer, ACH, brokerage account, IRA, or 1035 exchange. Not all insurance companies offer all available funding source options, and some funding sources can impact insurer processing times. Learn more.

Application Review

Within 1-2 business days, our team will review your Blueprint Income application and reach out to you to confirm any necessary details before finalizing the insurer application. As part of this process, we will send you the final insurer application to review and sign before submitting it to the insurance company.

Insurer Processing

Most insurers will typically have a processing period of 2-4 weeks to accept the application, process funding, and formally issue the policy. Processing may take longer for a 1035 exchange or transfer of assets.

Policy Receipt

The policy documents will be sent to you by either the insurer or the Blueprint Income team. This process can take 1-21 business days. Depending on the insurer, the policy documents will be sent electronically to your email or mailed directly to you.

Manage Your Annuities

Keep track of your annuity via our online portal. We'll be there to help with important milestones, like when a fixed annuity's rate guarantee is ending.

Blueprint Income is here to help guide you through the process; it's part of the service and commitment we provide to our clients. We will contact you in advance of your policy reaching the end of its guaranteed investment term and provide you with information on options available to you. In general, at the end of the guaranteed interest rate term, you can do any of the following: rollover your funds into a new fixed annuity, annuitize your policy, do nothing and let your policy auto-renew, or cash out your funds. The best option for you will depend on your age and your goals for the proceeds of your fixed annuity. To learn more about the options, head to this article to learn about what happens at the end of an annuity contract.