I consider myself a reasonably proficient investor but annuities are new to me.
For my short-term cash needs, I've been CD laddering.
As I look to invest for 2026 maturity (5 year), CDs are returning max 1% while "multi-year guaranteed annuities" (MYGA) are hovering around 3%.
The annuity bumpf compares MYGAs to CDs but the fineprint includes "The IRS issues a 10% penalty on gains withdrawn from a fixed annuity for account holders under age 59½.".
An I correct in understanding that, at maturity, I can withdraw the original investment amount and pay income tax but with the extra 10% penalty on the gain?
By my math, I'd still be ahead:
- Annuity $$$+(1.03^5 less income tax + 10%)
- CD $$$+(1.01^5 less income tax)
Am I missing anything else?