Reviewed July 20, 2026Sources updated July 20, 2026

What is the core legal difference?

A MYGA is an insurance contract issued by an insurance company. Its obligations depend on the written contract and the issuing company’s claims-paying ability.

A bank CD is a bank arrangement. FDIC protection can apply when the bank and holding meet the federal coverage rules, while an annuity contract is not FDIC-insured.

Primary sources: SEC annuity-contract guidanceFDIC bank-coverage guidance

How is the credited amount set?

The written MYGA contract shows how credited amounts apply during the stated term and which conditions apply. The contract, not a shorthand label, controls.

A bank CD agreement also shows its crediting terms and maturity date. Compare the actual written terms on the same date, and treat any later offer or renewal as a new set of facts.

Primary sources: SEC annuity-contract guidanceFDIC bank-CD term guidance

How do surrender terms and liquidity differ?

A MYGA may apply a surrender charge or another access limit when money leaves during the stated period. Some contracts describe limited access, but the exact wording controls.

A bank CD can also restrict early access or apply a consequence before maturity. Keep near-term money separate and compare the written access rules rather than assuming either arrangement behaves like cash.

Primary sources: SEC annuity-contract guidanceFDIC bank-CD term guidance

How does tax deferral enter the comparison?

Earnings inside a nonqualified annuity generally are not reported each year while they remain inside the contract. Tax rules apply when money comes out, and the contract’s tax setting matters.

Bank-CD interest generally follows a different reporting schedule. A qualified tax professional can compare the household’s records without turning a general page into a tax conclusion.

Primary sources: IRS pension and annuity income guidanceIRS interest-income tax topic

What happens when the term ends?

The current written term does not tell the household which MYGA terms may be offered later. Treat future terms as unknown until a new written choice is available.

A bank CD agreement may describe maturity and automatic renewal. Record the end date, what happens automatically, what requires an election, and when any later written terms become available.

Primary sources: FDIC bank-CD term guidance

Why do company strength and state availability matter?

An insurance company’s claims-paying ability supports its annuity obligations, so company-strength information belongs in the review. FDIC coverage is not a substitute for that review because it does not cover the annuity contract.

State insurance regulation also belongs on the checklist. Ask a licensed insurance agent to confirm whether the contract is among the written choices offered in the owner’s state and to explain its terms without treating a bank arrangement as the same thing.

Primary sources: SEC annuity-contract guidanceFDIC bank-coverage guidance

What belongs on a side-by-side review sheet?

Compare the two written arrangements by job, term, access, tax timing, protection, end-of-term choices, and the records the household will receive. Keep labels out of the decision.

If money may be needed during the term, test that need against each access rule before assigning it. A page cannot know the household’s timing or decide which arrangement belongs in the income plan.

  • The exact written term and how much the arrangement credits.
  • The maturity or term-ending date and what happens automatically.
  • Every surrender charge, early-access condition, and liquidity need.
  • The federal protection that applies to the bank side and the claims-paying support on the insurance side.
  • Tax-reporting questions for a qualified tax professional.
  • State availability and written contract terms for a licensed insurance agent to confirm.

Primary sources: SEC annuity-contract guidanceFDIC bank-coverage guidanceFDIC bank-CD term guidanceIRS pension and annuity income guidance