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Bank CD vs. MYGA

In 2009, interest rates on Bank CD’s and savings accounts plummeted to levels next to nothing. Even though interest rates have slightly recovered since its low point in 2012, the numbers still are very low. This is why it is important to utilize the best possible options that are available to you.

Insurance companies provide a financial product called the Multi-Year Guaranteed Annuity or MYGA. This product mimics a bank CD in that it offers a guaranteed rate of return for a certain period of time (typically 3-7 years). MYGAs offer many benefits beyond bank CDs.

The average annual rates of return are higher with MYGAs than bank CDs. As of June, 10, 2014, according to Bankrate.com, the highest 5 year bank CD in our local area is 1.5% at Dollar Bank. The highest rate that B&B Benefits can provide through a MYGA is 2.7%.

MYGA’s provide many other benefits other than just a higher interest rate. All interest is tax deferred, meaning you only only pay taxes when you make a withdrawal. The interest made also does not affect your income for the basis of social security taxes. MYGAs avoid probate; please click here for details. They can be transferred into an old-fashion annuity that provides a paycheck for life.

MYGA vs. CD MYGA CD's
Tax Deferred

Interest Counts as Income to Social Security

Bypasses Probate

Optional Lifetime Income
Yes

No

Yes

Yes
No

Yes

No

No

For more information, please contact Ian Bennett at (412) 901-7484 or click below to request a consultation.