Fixed Annuities vs. CDs

Fixed annuities (also known as a multi-year guaranteed annuities or MYGAs) and certificates of deposit (CDs) are good options for people who are looking to invest for a designated period without a lot of risk. Fixed annuities are insurance products that offer a safe, guaranteed and tax-deferred way to grow your retirement savings, with rates that are usually higher than CDs. CDs are offered by banks and credit unions, and are best for safe and guaranteed shorter-term investments.

FIXED ANNUITY

SOLD BY

Insurance Companies

Banks

AMOUNT YOU CAN INVEST

$2,500 - $3,000,000

Virtually any denomination

INVESTMENT TERM

1 - 10 years

3 months - 6 years

INTEREST RATES

Vary by investment term and size, but typically higher than CD rates

Vary by investment term and size, but typically lower than fixed annuity rates

TAXES

Taxes on interest gains are deferred until money is withdrawn

Interest gains are taxable annually as they are earned

ACCESS TO FUNDS

Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½

Typically there is not free access to the account balance

FINANCIAL PROTECTION

Backed by the issuing insurance company

Insured by FDIC

BENEFICIARIES

Asset passed directly to beneficiary without going through the probate process (legal will process)

Probate process (legal will process) required to pass asset to heirs

SOLD BY

FIXED ANNUITY

Insurance Companies

Banks

AMOUNT YOU CAN INVEST

FIXED ANNUITY

$2,500 - $3,000,000

Virtually any denomination

INVESTMENT TERM

FIXED ANNUITY

1 - 10 years

3 months - 6 years

INTEREST RATES

FIXED ANNUITY

Vary by investment term and size, but typically higher than CD rates

Vary by investment term and size, but typically lower than fixed annuity rates

TAXES

FIXED ANNUITY

Taxes on interest gains are deferred until money is withdrawn

Interest gains are taxable annually as they are earned

ACCESS TO FUNDS

FIXED ANNUITY

Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½

Typically there is not free access to the account balance

FINANCIAL PROTECTION

FIXED ANNUITY

Backed by the issuing insurance company

Insured by FDIC

BENEFICIARIES

FIXED ANNUITY

Asset passed directly to beneficiary without going through the probate process (legal will process)

Probate process (legal will process) required to pass asset to heirs

FIXED ANNUITY

SOLD BY

Insurance Companies

Banks

AMOUNT YOU CAN INVEST

$2,500 - $3,000,000

Virtually any denomination

INVESTMENT TERM

1 - 10 years

3 months - 6 years

INTEREST RATES

Vary by investment term and size, but typically higher than CD rates

Vary by investment term and size, but typically lower than fixed annuity rates

TAXES

Taxes on interest gains are deferred until money is withdrawn

Interest gains are taxable annually as they are earned

ACCESS TO FUNDS

Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½

Typically there is not free access to the account balance

FINANCIAL PROTECTION

Backed by the issuing insurance company

Insured by FDIC

BENEFICIARIES

Asset passed directly to beneficiary without going through the probate process (legal will process)

Probate process (legal will process) required to pass asset to heirs

SOLD BY

FIXED ANNUITY

Insurance Companies

Banks

AMOUNT YOU CAN INVEST

FIXED ANNUITY

$2,500 - $3,000,000

Virtually any denomination

INVESTMENT TERM

FIXED ANNUITY

1 - 10 years

3 months - 6 years

INTEREST RATES

FIXED ANNUITY

Vary by investment term and size, but typically higher than CD rates

Vary by investment term and size, but typically lower than fixed annuity rates

TAXES

FIXED ANNUITY

Taxes on interest gains are deferred until money is withdrawn

Interest gains are taxable annually as they are earned

ACCESS TO FUNDS

FIXED ANNUITY

Typically a portion of the account balance will be available for withdrawal annually, but a 10% IRS penalty is imposed for withdrawals before age 59½

Typically there is not free access to the account balance

FINANCIAL PROTECTION

FIXED ANNUITY

Backed by the issuing insurance company

Insured by FDIC

BENEFICIARIES

FIXED ANNUITY

Asset passed directly to beneficiary without going through the probate process (legal will process)

Probate process (legal will process) required to pass asset to heirs

Compare today's rates and earnings between fixed annuities (MYGAs) and CDs

Investment Amount*

*Required

State†

†Required for adjustment

Term†

†Required for adjustment

Earnings is based on the investment amount. Default table earnings reflect a $100,000 investment amount.

Fixed Annuities vs. CDs

What's the difference between a fixed annuity and a CD?

Compare today's rates and earnings between fixed annuities (MYGAs) and CDs