Presuming that you're investing using taxable (that is, not IRA or Roth) funds, you'll have taxable income when the MYGA term ends, unless you do a "1035 exchange" into another annuity. Such an exchange defers, but does not avoid, the reporting of taxable income.BlackcatCA wrote: ↑Sat Nov 12, 2022 1:33 pm Yes I am in CA, and I was using 50k with the calculator. Wow, did not know there are additional taxes on annuities— does it mean I will get taxed when the MYGA term ends?
Also have not seen state differences in rates before and did not expect such a large difference. Maybe MYGA is not a good product for us living in CA?
Thanks to this group I learn something new today.
I know that MYGA interest is taxable income for Federal purposes. I suspect it is also taxable income for California purposes, but you'd need to check that out.
You're correct that annuities in general, and MYGAs in particular, are not as attractive for California residents as for residents of most other states. That annuity premium tax is a really killer on a short-term product like a MYGA. Further, the guaranty fund coverage in California is on 80% of the surrender value, vs. 100% coverage in every other state that I know of.
I'd be much less inclined to buy a MYGA if I lived in California.