MYGA vs CD's All in option

[Gonzo26]

I know there are other discussion on MYGA's . Did some book keeping today on my non retirement items . Broken down as follows:
4.4M in MYGA's
700K in individual Muni Bonds (these will stay)
5.4M in CD's
50K+ in Mutual Funds
30k in individual stocks.

Not hitting SS for another 4-5 years , DW already gets SS. Any advice on moving more CD money to MYGA's as long as under state insurance cap and A and above companies??. Still working, have no debt. Also moving small amount of money every month to different mutual funds at Fidelity. Trying to lower taxes. Our spend may be 200K per year. The MYGA pay about 4.8 - 5.2 VS CD's max at 3.9. Not a huge difference but the differed taxes and more money earned on a large amount is tempting. I have been doing 1035 Exchanges this last year because money is not needed at this time. Thanks.

Have about 1M in retirement accounts

 

[jazz4cash]

I can’t fathom having so many contracts from different issuers to stay within FDIC or SGA limits. At least some CDs offer CEDARS to mitigate risk. Mothing like that for MYGAs that I am aware of. I’d stick with AA insurers but their rates might be < CDs.

Edit: take a look at Treasuries?

 

[pb4uski]

Are your MYGAs with a broker or with individual companies? 5 year CDs and UST are currently 4.15% and 3.85%, respectively. 5 year MYGAs through Schwab are 4.00% to 4.90%.

I can see the income deferral of MYGAs being attractive if you are still working but my question is... why are you still working with a WR of 1.9%?

I would look at MYGAs through a brokerage like Schwab, Fidelity, etc. because it is a lot easier then dealing directly with the issuer and would offer the tax deferral that you are seeking.

However, issuers are prohibited from even mentioning guaranty fund coverage so you're on you own for that. From Gemini:

... most platforms and brokerages are legally prohibited from even mentioning the state guaranty funds during the sales process.

While these firms offer modern dashboards and "one-stop" shopping, the responsibility of monitoring State Guaranty Association (SGA) limits—and diversifying across insurers to stay under those limits—falls squarely on you.

Why they don't monitor this for you:​

1. Legal "Gag Rules": Most states have laws (based on NAIC model regulations) that strictly prohibit insurance companies, agents, and brokers from using the existence of a guaranty fund as a "selling point" or an inducement to purchase. Mentioning the fund to a client is often a regulatory violation.
2. State-by-State Complexity: Your coverage is based on your state of residence, not where the broker is located. If you move from Texas ($250,000 limit) to Washington ($500,000 limit), your protection level changes. Tracking these moving targets for every client across all 50 states is a massive compliance liability that firms avoid.
3. Aggregate Limits: SGA limits are usually "per person, per insurer." A brokerage firm might know how many annuities you have with them, but they don't know if you have another $200,000 annuity with the same insurer through a different agent or a direct purchase. ...

 

[Gonzo26]

Are your MYGAs with a broker or with individual companies? 5 year CDs and UST are currently 4.15% and 3.85%, respectively. 5 year MYGAs through Schwab are 4.00% to 4.90%.

I can see the income deferral of MYGAs being attractive if you are still working but my question is... why are you still working with a WR of 1.9%?

I would look at MYGAs through a brokerage like Schwab, Fidelity, etc. because it is a lot easier then dealing directly with the issuer and would offer the tax deferral that you are seeking.

However, issuers are prohibited from even mentioning guaranty fund coverage so you're on you own for that. From Gemini:

Thanks for the info. Some are with ED Jones / Fidelity / Blueprint. I keep detailed sheet on all of them and have gone over a few thousand but no too much. No they are not suppose to talk about the state insurance. Also some with individual companies picked up a coupe of 5.1+ A+ companies recently. Can't really say why I'm still working, I guess its what I do!

 

[Gonzo26]

I can’t fathom having so many contracts from different issuers to stay within FDIC or SGA limits. At least some CDs offer CEDARS to mitigate risk. Mothing like that for MYGAs that I am aware of. I’d stick with AA insurers but their rates might be < CDs.

Edit: take a look at Treasuries?

The contracts are kind of a pain! I will look at Treasuries, Not very educated about them. Thank you.

 

[Al18]

CD's in a taxable account are throwing off interest that's taxable as income every year, while MYGA aren't taxable until you redeem them. Your portfolio will probably not keep up with inflation. Have you considered a dividend fund (SCHD, NOBL, VYG) to invest some of that money? These funds pay qualified dividends, but no long term capital gains.

 

[Earl E Retyre]

FWIW, 20 year treasuries today are at 4.835%.

 

[Car-Guy]

At your age, NW , current investments and planned spend rate, why are you still working? The one thing you can't buy is more time.

 

[Koolau]

I don't know your spending level, but with your significant-sized stash, you could likely afford to just use CD's. True, you don't get the deferred taxes, but, trust me on this one, those taxes do become payable sooner or later.

I would love to be all CD's if I had a big enough stash. Best luck.

 

[ShokWaveRider]

Are your MYGAs with a broker or with individual companies? 5 year CDs and UST are currently 4.15% and 3.85%, respectively. 5 year MYGAs through Schwab are 4.00% to 4.90%.

I would look at MYGAs through a brokerage like Schwab, Fidelity, etc. because it is a lot easier then dealing directly with the issuer and would offer the tax deferral that you are seeking.

I have a lot of MYGAs, but NOT though Schwab, I found them not to be as competitive as Blueprint Income who I have been with for years. I have one direct (Canvas) that is the only one below AA rating. I know the folks at Blueprint almost personally as I speak to then a lot during contract creation and/modification. They told me Schwab and other brokers take more commission from the insurance companies and hence the descrepency on interest rates.

 

[jazz4cash]

I like MYGAs and I like Blueprint but they are not very helpful monitoring contracts once they are purchased. I believe you’d need to setup logins for each issuer or just wait for the annual statements. Maybe other brokers are better. I’d give Fidelity a shot.

 

[ShokWaveRider]

I like MYGAs and I like Blueprint but they are not very helpful monitoring contracts once they are purchased. I believe you’d need to setup logins for each issuer or just wait for the annual statements. Maybe other brokers are better. I’d give Fidelity a shot.

Yes, I check mine once a month, it is pin free and takes seconds to set up a company login. You only need to do it once per contract.

 

[jazz4cash]

Yes, I check mine once a month, it is pin free and takes seconds to set up a company login. You only need to do it once per contract.

Once per issuer, right? At Americo I have four contracts that I can access with a single login. There is no summary listing of balances or activity. I have to select each contract to view balance. It feels very low tech. I bought through Blueprint but they don’t update the balances after issue, so that’s yet another login. I am curious if Fidelity updates balances on the annuities they broker.

 

[Spock]

I'm waiting with MYGAs to see how the private credit storm cloud hits insurance companies. I've turned over a couple of rocks looking at insurance company bonds and, of the ones I looked at, they had all been bought out by private credit firms and operate as subsidiaries.

The recent news about one of the private credit firms bragging about how because they were able to sell billions of their illiquid loans at "99.7% of par" it proves that their holdings are solid. But they sold those loans to their own insurance subsidiary.

I'm not trusting the ratings agencies very much right now.

 

[Livefree]

Once per issuer, right? At Americo I have four contracts that I can access with a single login. There is no summary listing of balances or activity. I have to select each contract to view balance. It feels very low tech. I bought through Blueprint but they don’t update the balances after issue, so that’s yet another login. I am curious if Fidelity updates balances on the annuities they broker.

Yes I have a MYGA from Fidelity, and the balance updates consistently. I had a phone meeting with Fidelity this week, and they quoted me MYGA rates of 4.85% for 5 years, and 4.75% for 3 years.

 

[jazz4cash]

I'm waiting with MYGAs to see how the private credit storm cloud hits insurance companies. I've turned over a couple of rocks looking at insurance company bonds and, of the ones I looked at, they had all been bought out by private credit firms and operate as subsidiaries.

The recent news about one of the private credit firms bragging about how because they were able to sell billions of their illiquid loans at "99.7% of par" it proves that their holdings are solid. But they sold those loans to their own insurance subsidiary.

I'm not trusting the ratings agencies very much right now.

I am skeptical of anything less than A- rating. I think there is good reason to be cautious with obscure insurers in general. I’ll nibble but that’s all. I do hold some BDC/PE bonds, though. They are selling off but that does mot concern me. Fortunately I don’t rely on significant income from these investments. I think it could be years for any private credit market fallout to occur.

 

[GenXguy]

I am skeptical of anything less than A- rating. I think there is good reason to be cautious with obscure insurers in general. I’ll nibble but that’s all. I do hold some BDC/PE bonds, though. They are selling off but that does mot concern me. Fortunately I don’t rely on significant income from these investments. I think it could be years for any private credit market fallout to occur.

I have stuck with A for the minimum rating for the most part on my MYGAs but did invest a smaller amount into a Canvas B++, with a shorter 5 year term vs. the 6 year terms of the others.

 

[jazz4cash]

I have stuck with A for the minimum rating for the most part on my MYGAs but did invest a smaller amount into a Canvas B++, with a shorter 5 year term vs. the 6 year terms of the others.

I don’t consider Canvas to be obscure so I’d be ok with the B++

 

[ShokWaveRider]

I have had canvas b++ for 2years with no issues (5 year)

 

[TickTock]

I'd want A+ for lifetime income, but for a ~5 year MYGA I'm okay with lower ratings.