Help Increase Your Retirement
Income With a MYGA

Looking for additional
retirement savings options?

Purchase a Multi-Year Guaranteed Annuity, or MYGA
And Get Guaranteed Rates for a Set Number of Years

Many of you started saving money for retirement more than fifteen years ago. You may have planned to live comfortably off the interest. If you started in 2000, the 10 Year Treasury yielded rates between 5% and 7% in 2000.1 But whatever you planned, the drop in long term interest rates has created challenges for many. Fortunately, a multi-year guaranteed annuity, or MYGA could help you make your savings work harder for you.

Couple studying higher MYGA interest rates from Phoenix

A MYGA could be a good solution for finding a higher interest rate on some of your assets to help better meet your expenses in the future. In some ways, a MYGA functions like a bank certificate of deposit, or bank CD, in that you are guaranteed an interest rate for a specific period of time. However, there are also a number of differences. MYGAs are a type of insurance product. They are long term contracts and they can be used to generate a guaranteed income that cannot be outlived. MYGAs can also offer a competitive interest rate for a set period of years. If you purchase a MYGA, the carrier will typically pay you interest on your single premium payment each year for the guaranteed period. You can usually withdraw the interest each year.

Early withdrawal of the initial premium will typically be subject to a penalty. This penalty decreases each year. The period of time that funds are subject to a surrender charge typically matches the guarantee period. It is recommend that you have sufficient liquid funds available during this time period.

Many carriers also include a market value adjustment, or MVA. In that case, you would assume the interest-rate risk if you withdraw early, which means the amount you receive may be higher or lower than what you requested, based on the adjustment. This feature can allow carriers to offer a higher rate of return for the guaranteed period. At the end of the guaranteed period, you can either withdraw the entire account value or allow it to automatically renew again for another guaranteed period of the same length.

Want to discuss the MYGA options Phoenix offers?
We currently offer guarantee periods that have annual rates between 3.15% and 3.50%*

* Rates are only guaranteed for the guarantee period. Renewal rates may differ.

Annuities can seem complicated, but so can planning for retirement. As challenging as it can be to build a retirement nest egg, it can be even harder to convert those assets into a predictable stream of income. Annuities can provide guaranteed interest rates and streams of income that can help you meet your retirement income needs. Make certain you understand how any annuity that you may purchase works, the benefits it provides and all restrictions on early withdrawals. Note that guarantees are based on the financial strength and claims-paying ability of the issuing carrier.

A multi-year guaranteed annuity, or MYGA, is an insurance product that provides guaranteed interest rates for a set period of time. These contracts are typically funded with a single premium payment. The insurer will credit interest to your account value from the date of issue until the end of the guaranteed period. They are long-term products and are subject to surrender charges and a holding period.

There are a number of important difference between MYGAs and other fixed-interest types of products. Various types of financial products may make sense for your needs and this is not intended to be a comprehensive comparison.

What's important to understand about MYGAs is that they are insurance products issued by an insurance carrier. Their guarantees are backed by the financial strength and claims-paying ability of the issuing company. They are not FDIC insured. They are long-term products and can be used to build retirement assets without premium risk that is typically associated with stocks, bonds or mutual funds.

Fully review any product details before making a purchasing decision.

The issuing insurance carrier is responsible for the guarantees. Guarantees are backed by the financial strength and claims-paying ability of the issuing carrier.

Generally, retirees over the age of 60 find the benefits of the product most attractive. Assets in a MYGA are not subject to market fluctuations as they are fixed insurance products. They can be used to generate a predictable stream of income. However, the premium can generally not be withdrawn prior to the end of the guarantee period without incurring a surrender charge and possible market value adjustment. Any consumer should carefully consider his or her financial situation and potential need for liquidity in the coming years before purchasing a MYGA.

Many carriers require a minimum of a $15,000 premium or transfer of assets to purchase a MYGA.

No. A MYGA generally provides a higher rate of interest than comparable products. However, any premium placed in a MYGA will be subject to penalty charges that decline over time and possibly a market value adjustment. Carefully consider your liquidity needs before purchasing a multi-year guaranteed annuity, or MYGA.

You typically will not pay a surrender charge if you withdraw up to the amount of accumulated interest. Withdrawals in excess of the accumulated interest on the annuity will likely be subject to surrender charges and/or market value adjustments. Keep in mind that any withdrawals will reduce the account value and the value of any protection benefits. Additionally, withdrawals are taxed as ordinary income and, if taken prior to age 59 1/2, a 10% federal tax penalty." to make a more complete explanation. Before making a purchasing decision, it's important for you to understand exactly how the penalties, surrender charges, and holding periods apply to your specific annuity contract.

Yes, carriers will generally issue MYGAs to individuals from ages 0 to 85.

Some carriers include provisions that will allow you to withdraw some or all of your account value without penalty if a qualifying event occurs, for example if you were to suffer from a terminal illness.

At the end of the guaranteed period, you usually have the flexibility to continue for another period, based on the original guaranteed period, or choose a new period with a different duration. At the end of each guaranteed period, the carrier will typically declare a new interest rate for each new guaranteed period. If the carriers receives no direction from you, the carrier will usually automatically renew your annuity for the same period at the then-current interest rate. If you would prefer to withdraw some or all of your account value at the end of any guaranteed period, you will generally have a 30-day window to do so, free of any surrender charge or market value adjustment.

At the end of each guaranteed period, your annuity will usually automatically renew into a new guaranteed period at the then-current interest rate. Surrender charges will also typically be reset.

You typically have a set number of days (at least 10) to look at the multi-year guaranteed annuity after you buy it. If you decide during that time that you don’t want it, you can return the annuity and get all of your premium back, less any prior withdrawals. Read the cover page of your annuity contract as soon as you receive it to understand how many days you have to decide if you want to keep it.

If you should die before the annuity date, your beneficiary will receive the account value of your annuity. Surrender charges do not apply at death. Any gain in the annuity would be subject to income tax. If you should die after the annuity date, any benefits payable to your beneficiary would depend on the income option chosen.

Annuities are tax-deferred, which means you don't pay taxes on the interest earned until you receive a distribution. When you take a withdrawal or begin receiving income, the distributions are subject to ordinary income tax. If withdrawals are taken, the distributions are taxed on a last in, first out (LIFO) basis, meaning withdrawals are made using earnings first, and the contract owner will be taxed on these payments until all the earnings have been distributed.

Buying an annuity within an IRA, 401(k) or other tax-deferred retirement plan doesn’t give you any extra tax benefit. Choose the annuity based on its other features and benefits as well as its risks and costs, not its tax benefits. Please consult your tax advisor regarding your unique situation.

The Internal Revenue Code provides that if a non-natural person holds the annuity and such person is not holding as an agent for a natural person, the contract shall not be treated as an annuity contract for income tax purposes.


Notes

1 The CBOE Interest Rate Ten Year Treasury Note reached a high of 6.82% in January, 2000. Yahoo! Finance.

Important Disclosures

Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing carrier. Not FDIC/NCUA insured, No Bank or Credit Union Guarantee.

Review policy benefits, costs, exclusions, limitations and terms prior to making a purchasing decision. Products may not be available in all states.

Phoenix annuities are issued by PHL Variable Insurance Company (PHLVIC) (Hartford, CT). PHLVIC is not authorized to conduct business in ME and NY.

Members of The Phoenix Companies, Inc., a Nassau Re Company