CD vs MYGA, California Tax Erosion Calculator

GOLDSTEIN & CO.California Structured Installment Sale Specialist

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Your Numbers

CD principal

CD APY (after-promo rate)

MYGA APY (currently available)

Term (years)

Your Tax Situation

Annual taxable income

Use the figure on line 15 of your most recent 1040, taxable income, not gross. This determines which marginal bracket the CD interest gets stacked on top of.

Filing status

State

When will you actually use the MYGA money?

MYGAs grow tax-deferred, you only owe tax when you actually pull the money out. Most people pull MYGA money in retirement when their income (and tax bracket) is lower than their working years. That's where the real advantage compounds.

Federal marginal

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CA marginal

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Combined on every $ of CD interest

—

After-tax CD yield

—

Net Nut, Total After-Tax Savings With MYGA Over The Term

More money in your pocket by choosing the MYGA over the CD, after all federal & California state taxes are paid.

⚠ The CD's hidden problem isn't the rate, it's the annual 1099

Why a 4.5% CD doesn't actually pay you 4.5%

When your bank pays you 4.5% interest on a CD, the bank issues you a 1099-INT every January for the prior year's interest. The IRS and the California Franchise Tax Board want their cut that same year, taxed as ordinary income at your top marginal rate, typically 22-37% federal plus 9.3-13.3% California. You owe the tax whether you touch the money or not.

The result is tax drag: instead of compounding at the headline 4.5%, your money compounds at the after-tax rate, typically 2.8-3.1% in California. Over a 5-year term that gap is thousands of dollars. Over 10+ years it's tens of thousands.

The MYGA fix: a Multi-Year Guaranteed Annuity grows tax-deferred under IRC §72. No annual 1099. Zero tax until you actually pull the money out. Full balance compounds untouched at the contractual rate. When you do withdraw (typically in retirement at a lower bracket), you pay tax on the gain, but at a substantially lower rate than your working-years bracket, AND you've enjoyed years of full-rate compounding the CD couldn't match.

Certificate of Deposit

Interest taxed every year as ordinary income.

Starting principal—

Gross interest earned (term total)—

Total income tax paid—

Final balance, after tax—

Effective annualized yield—

Year by Year

Yr	CD interest	CD tax	CD balance	MYGA interest	MYGA balance	Gap

Want a MYGA quote in your name?

I'm Hans Goldstein, a California-licensed insurance agent. I'll pull current MYGA rates from a half-dozen carriers, send you the highest-paying option that fits your situation, and walk you through the paperwork.

📞 Call 213-340-2018

Disclosures. Educational tool, not tax or investment advice. CD interest is taxed federally and (if a California resident) at California state rates in the year earned. MYGA contracts grow on a tax-deferred basis under IRC §72; gains are taxed as ordinary income when distributed and may be subject to a 10% federal additional tax if taken before age 59½. Surrender charges and market-value adjustments may apply to MYGAs withdrawn before the term ends. CDs are FDIC-insured up to $250,000 per depositor, per insured bank. MYGAs are not FDIC-insured; they are backed by the issuing insurance carrier and the state guaranty association. This calculator uses 2026 IRS marginal brackets (Rev. Proc. 2025-32) and 2025 California Franchise Tax Board brackets (CA 2026 pending) and assumes the CD interest does not push you into a new bracket on a per-year basis except where it materially does, bracket arithmetic is simplified. Actual taxes depend on deductions, credits, AMT, NIIT (3.8% above MAGI thresholds, not modeled here), and other factors. Consult a CPA for personalized tax projection. Hans Goldstein · NPN 20602398 · Licensed insurance producer (CA, GA + others) · [email protected] · 213-340-2018.