function calculateMYGA() {
var premium = parseFloat(document.getElementById('initialDeposit').value);
var years = parseFloat(document.getElementById('guaranteeTerm').value);
var rate = parseFloat(document.getElementById('interestRate').value) / 100;
var taxRate = parseFloat(document.getElementById('taxBracket').value) / 100;
if (isNaN(premium) || isNaN(years) || isNaN(rate)) {
alert("Please enter valid numbers for premium, term, and rate.");
return;
}
// MYGA formula: A = P(1 + r)^t
var maturityValue = premium * Math.pow((1 + rate), years);
var totalInterest = maturityValue – premium;
var estimatedTax = 0;
if (!isNaN(taxRate)) {
estimatedTax = totalInterest * taxRate;
}
var netGain = totalInterest – estimatedTax;
document.getElementById('totalValue').innerHTML = '$' + maturityValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalInterest').innerHTML = '$' + totalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('taxLiability').innerHTML = '$' + estimatedTax.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('netGain').innerHTML = '$' + netGain.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('myga-results').style.display = 'block';
}
Understanding Your MYGA Rates
A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed annuity that provides a guaranteed interest rate for a specific period, typically ranging from 3 to 10 years. Because MYGAs offer tax-deferred growth, they are often compared to Certificates of Deposit (CDs), though they function differently under tax law.
How to Use This Calculator
This calculator helps you project the future value of your investment based on the current crediting rates offered by insurance carriers. To get an accurate estimate:
Initial Premium: The lump sum you intend to deposit into the annuity.
Guarantee Period: The duration the insurance company guarantees the rate (e.g., 5 years).
Crediting Rate: The annual fixed interest rate offered for that term.
Tax Rate: Your estimated marginal tax bracket at the time you plan to withdraw the funds.
The Power of Tax Deferral
One of the primary advantages of a MYGA is that you do not pay taxes on the interest earned until you actually withdraw the money. This allows your interest to earn interest, leading to higher compounding efficiency over long periods compared to taxable accounts.
Example Calculation
If you invest $100,000 in a 5-year MYGA with a 5.00% annual rate:
Year 1: Value grows to $105,000.00
Year 3: Value grows to $115,762.50
Year 5 (Maturity): Total value reaches $127,628.16
Total Interest: $27,628.16 in guaranteed earnings.
Note: Most MYGAs allow for limited annual withdrawals (often 10% of the contract value), but withdrawing more than the allowed amount or withdrawing before age 59½ may result in surrender charges and IRS penalties.