MYGA rates vs CDs for Westfield and Hamilton County savers

Hypothetical example: $250,000 over five years

This is a hypothetical illustration, not a quote or a guarantee of future results. It uses two rates as of October 20, 2026: a 6.00% effective annual rate on a five-year MYGA available in Indiana (for a premium of $100,000 or more), and a 3.25% APY on Indiana Members Credit Union's 60-month share certificate (CD). Rates change often and vary by premium amount, state, and insurer. Renewal rates after the guarantee period may be lower.

Assumptions:

• A single $250,000 deposit in each.
• MYGA: held for the full five-year guarantee period, no withdrawals, no surrender charges because the contract is held to the end of the term.
• Surrender charges and a market value adjustment may apply to early withdrawals.
• CD: held for the full 60-month term at 3.25% APY, compounded annually, with no withdrawals.
• MYGA interest is tax-deferred, which assumes non-qualified money.
• CD interest is taxed each year at a 24% federal rate, which is a 2.47% after-tax rate.
• State income tax is excluded.
• Figures are rounded to the nearest dollar.

At the end of year five in this hypothetical, the MYGA contract value is $334,556 and the CD balance, after federal tax paid along the way, is $282,438, a difference of $52,118. That difference is before tax on the MYGA's $84,556 of deferred gain. If the contract were surrendered at the end of the term and that gain taxed at the same 24% federal rate (about $20,293), about $314,263 would remain, a difference of about $31,824 compared with the CD, before state tax. If the money stays in the contract, or moves with a 1035 exchange, the tax stays deferred. Withdrawals before age 59½ may also face a 10% IRS penalty. Your results will differ.

A MYGA is not FDIC or NCUA insured. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. A credit union certificate is insured by the NCUA within its limits; a $250,000 certificate at one credit union with dividends credited would exceed the standard $250,000 NCUA share insurance limit.

A headline rate is where a MYGA comparison starts, not where it ends. Check the term, the free-withdrawal provision, the surrender schedule, and the company behind the promise. The rate you can explain, from a company you would trust to be there in year five, is the one that matters.

What a MYGA rate actually is

A MYGA is a fixed annuity. The insurer credits a declared interest rate for a set number of years — commonly three, five, seven, or ten. You know the rate on day one. You know the term. At the end of the guarantee period you can take the value, renew, or 1035-exchange into another contract, subject to the contract and tax rules.

• It is an insurance contract, not a bank deposit.
• The rate is a contractual credit — not an FDIC APY.
• Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
• Most contracts allow a limited penalty-free withdrawal each year. Taking more during the surrender period costs you.

Line the rates up — then adjust for tax

On a non-qualified CD, interest is generally taxable in the year it is credited. The APY on the door is not the after-tax yield. In a 24% federal bracket, a 3.25% APY CD is about 2.47% after a 24% federal tax rate, before state tax. That is the rate used in the $250,000 table above. The CD still has FDIC or NCUA coverage inside the limits. That protection has a price, and part of the price is the tax bill along the way.

A MYGA in a non-qualified contract is tax-deferred. Interest can compound without a 1099 each year. When money comes out, gain is generally taxed as ordinary income. Deferral is not a tax-free gift. It is a timing difference — and for money you do not need this year, compounding before tax is one reason a MYGA rate can look higher and still be the wrong tool if you need the cash next spring.

• CD: stated APY, usually taxed as earned, FDIC or NCUA within limits.
• MYGA: stated rate for the term, generally tax-deferred until withdrawal, not FDIC insured, backed by the financial strength and claims-paying ability of the issuing insurer.
• IRA or other qualified money: the tax treatment of the two products converges. Then the comparison is rate, liquidity, fees, and who stands behind the promise.

Do not shop rate in a vacuum

The top number on a “best MYGA rates” page is often from a smaller or lower-rated carrier, a higher minimum premium, or a contract with little or no free withdrawal. Stronger carriers — the ones rated at the top of AM Best’s scale — frequently credit a little less. That spread is information. It is the market pricing the promise.

This practice is independent. The work is to compare rate, term, free-withdrawal provision, market-value adjustment, and the insurer — not to send every dollar to whoever printed the largest percentage this week.

When the CD still wins

Use a CD when you need a known dollar amount on a known date, you want bank or credit-union insurance inside the coverage limits, and you might need the money when the term ends — or sooner, and you can live with the early-withdrawal penalty. Near-term cash does not belong in a multi-year surrender schedule, whatever the rate.

When a MYGA belongs in the conversation

A MYGA belongs in the conversation when a slice of savings has a multi-year horizon, you want a stated rate without market risk, and tax deferral on non-qualified money would actually be used. It is still not a lifetime paycheck. If the job is income you cannot outlive, that is an income annuity or a living-benefit design — a different contract. A MYGA can still play a supporting role; see using a MYGA as an income bridge.

Fixed indexed annuities, fixed multi-year guaranteed annuities, and income annuities are insurance contracts — a paycheck from an insurer, not a market bet. A CD is a deposit. Put the rate next to the job, the tax, and the company. Then decide.

If you want current MYGA rates shopped against the CDs you already own — term, tax bracket, and carrier strength on the table — that is a conversation this practice is built for.