Some of my 1 and 3 year relatively juicy brokered CDs have been maturing and the recent sub 1% replacements and the current bond market just don't "interest" me when it comes to my safe stash.
Started looking at MYGAs (sometimes called "CD annuities") because the 5 year contracts are currently yielding a bit above 3% for 'A' rated firms. Not completely illiquid, some deals allow limited withdrawals of interest. I plan on letting the returns compound. So my 5 year compounded contract yields 3.24%. I am OK with that.
If using pre-tax IRA funds, the contract stays as part of your IRA portfolio and a direct institution to institution transfer does not count as an IRA rollover. Outside of an IRA, the taxes are deferred. At maturity you can either receive a lump distribution or periodic distributions to disperse tax burdens, a nice option for non IRA annuities.
They are not backed by the Fed like a CD, however they may be covered by state guaranty institutions should the insurance company fail. My state covers an aggregate of 300K dollars or 250K per contract. I have no idea how messy an unfortunate event like that can get. Yikes.
Well just thought I would share that info because I never considered any annuities before now but with such low fixed rates perhaps other retirees may want to consider them.
