MYGA Renewal Calculator (2026): Renew, 1035 Exchange, or Cash Out at Term End?

Your multi-year guaranteed annuity just ended its guarantee period, and the letter from your carrier offers a renewal rate that looks nothing like the rate you originally bought. This is the moment the annuity industry counts on you doing nothing. Renewal rates routinely sit hundreds of basis points below the new-money rates the same carriers advertise to strangers, and the only consequence of inertia is a fresh surrender schedule that locks the loyalty penalty in. The calculator below puts real after-tax numbers on your three options: renew at the carrier’s offer, execute a tax-free 1035 exchange to a carrier paying the current rate, or cash out, pay the tax, and reinvest the remainder.

Key Takeaways

• The 30-day window after your MYGA’s guarantee period ends is the one moment you can move the full value without surrender charges. Miss it and a new surrender schedule usually starts.
• Renewal rates are set by your contract and frequently land far below the new-money rate. At the calculator’s defaults, a 435-basis-point loyalty gap costs $45,899 after tax over just five years on a $250,000 MYGA.
• A 1035 exchange moves your entire account, gains included, to a new carrier with no tax event, no withdrawal, and no interruption in deferral. It is almost always the right answer when the rate gap is wide.
• Cashing out makes the entire gain taxable in one year and, under age 59½, adds a 10 percent penalty on the gain. It only wins when the new-money rate is unusually low or your alternative investment is demonstrably better after tax.
• Do nothing and you do not lose your money. You simply renew at the loyalty rate, with a new surrender schedule, and the gap keeps compounding every year you stay.

What Actually Happens When Your MYGA Ends

A multi-year guaranteed annuity pays a fixed rate for a fixed period, typically three, five, seven, or ten years. When the period ends, the contract enters a short transition zone that most owners never think about until the letter arrives. During that window, generally 30 days after the end of the guarantee period, you have four options, and each one leads somewhere very different.

1. Renew. Do nothing, or affirmatively accept, and the contract rolls into the next guarantee period at your carrier’s renewal rate. Your money never moves, but a new surrender-charge schedule normally begins.
2. 1035 exchange. Transfer the entire contract to a different annuity, usually at another carrier paying the current new-money rate. Section 1035 of the Internal Revenue Code makes the swap tax-free, and the free-withdrawal window means no surrender charge.
3. Withdraw the full value. Take the cash. The entire gain above your basis becomes ordinary income in the year you take it, and if you are under 59½ a 10 percent additional tax applies to the gain.
4. Annuitize. Convert the account into a stream of income. Rarely the right move at exactly the moment a rate reset is due, because you permanently lock the payout off the loyalty-rate account rather than repositioning first.

Stan the Annuity Man walks through exactly what carriers do at the end of a MYGA term, including the renewal-rate mechanics this calculator models:

The Renewal Trap: How Loyalty Rates Really Work

Carriers advertise aggressively for new money. In October 2026 the top five-year MYGA rates cluster between roughly 5.80 and 6.30 percent, with the strongest national offers near 5.85 to 6.00 percent. What the same carriers pay existing contracts at renewal is a different story entirely. The renewal rate lives in your contract, is chosen by the carrier for each new period, and has no obligation to track the advertised rate. Renewal offers of 0.50 to 2.50 percent when new money pays nearly 6 percent are not an anomaly. They are the business model: the spread between what loyal money earns and what new money earns is real revenue.

The table below holds everything at the calculator’s defaults, $250,000 of account value, a $200,000 cost basis, a 27 percent combined tax rate, a 5.85 percent new-money rate, and a five-year horizon, and varies only the renewal rate your carrier offers. The final column names the better path at that renewal rate.

Read the third column carefully. At a 1.5 percent renewal rate, the after-tax value of your account is barely more than the $250,000 you started with. Five years of loyalty, at a 27 percent tax rate, produces roughly $600 of after-tax gain. The same money exchanged at the current new-money rate produces $46,503 of after-tax gain on the same basis over the same five years. That asymmetry, not the headline renewal rate itself, is what makes the renewal decision the single most consequential date in the life of the contract.

The MYGA Renewal Decision Calculator

Enter your account value, your cost basis, the renewal rate your carrier offered, and the new-money rate you could get elsewhere. The calculator prices all three paths after tax and names the winner. It also applies the 10 percent IRC §72(q) penalty on the gain automatically whenever the owner is under 59½.

How the Calculator Works

Every path is priced to the same after-tax endpoint so the comparison is honest. The mechanics differ by path, and understanding them is most of the education you need to make this decision well.

• Renew path: your full account value compounds at the renewal rate for the next term. All growth stays untaxed until the end, when the gain above your basis is taxed as ordinary income at your combined federal-plus-state rate. Under 59½, any cash-out or exit also carries the 10 percent §72(q) additional tax on gains.
• 1035 exchange path: the identical account compounds at the new-money rate instead. Same deferral, same exit tax at the end, and crucially no tax event at the switch, because Section 1035 of the Internal Revenue Code permits tax-free exchange of an annuity for an annuity. The only difference between the two paths is the rate, which is exactly the point.
• Cash-out path: the entire current gain is taxed immediately at your combined rate, plus the 10 percent penalty on the gain if you are under 59½. The after-tax remainder is then reinvested at your selected return, taxed annually, which is why a 4.5 percent gross return compounds at only 3.29 percent after a 27 percent tax bill.

The year-by-year table inside the tool shows all three paths compounding together, which makes the divergence visible early: the exchange path pulls ahead in year one and never looks back at the default inputs.

The 30-Day Window Is the Whole Game

Every path above is only available without penalty during the free-withdrawal window that opens at the end of your guarantee period. Miss it, and the typical contract restarts a full surrender-charge schedule on the same money. Using a common restarted five-year schedule, here is what waiting does to a $250,000 MYGA at the calculator's default assumptions. The final column compares each scenario's after-tax value, grown five years at the 5.85 percent new-money rate, against acting inside the window.

Notice that even the cheapest late action, at 60 months, still costs $8,730 against acting on time. The surrender schedule is not designed to be gentle, and it compounds the loyalty-rate damage already priced into the renewal column above. Mark the end of your guarantee period on a calendar with a 45-day reminder, because carriers are under no obligation to nag you. If you cannot find your contract's window, your state insurance regulator or the NAIC consumer resources can help you interpret the surrender provisions.

The Tax Mechanics, Line by Line

At the default inputs, $250,000 of value against a $200,000 basis, here is the tax picture behind the three paths. The headline: deferral is worth $13,500 of tax today, but the real prize is not today's tax. It is what the deferred account compounds into before any tax is ever due.

The counterintuitive line is the fourth one: exchanging into the better rate means a larger eventual tax bill, $35,693 against $18,717, because you earned more money. Paying $16,976 more in tax five years from now to gain $45,899 of after-tax value is the trade every rational saver should take. Fear of the bigger future tax number is one of the most common reasons owners talk themselves into renewing at the loyalty rate, and it is exactly backwards: the tax only exists because the account grew.

How Low Can the Renewal Rate Go Before Renewing Makes Sense?

The calculator's verdict flips from exchange to renew once the renewal offer gets within a hair of the new-money rate. Solving for the break-even renewal rate, the rate at which renewing and exchanging finish exactly tied after tax, produces a strikingly tight number. At $250,000 of value on a $200,000 basis, 5.85 percent new money, and a 4.5 percent taxed annually reinvestment alternative, the break-even sits near 0.10 percent across every term length and bracket tested. In other words, unless your carrier renews you within roughly ten basis points of new money, the exchange wins.

The lesson generalizes: the exchange costs nothing and the renewal rate almost never comes close. Some carriers genuinely do renew competitive contracts near the advertised rate, and a few even renew existing clients at the full new-money rate to retain assets. The only way to know which kind of carrier holds your money is to ask for the renewal rate in writing before the window, then run both numbers.

The New-Money Rate Landscape: October 2026

The exchange option is only as good as the rate you can actually get elsewhere. As of October 2026, top five-year MYGA rates from nationally available carriers cluster in the mid-5-percent range after the Federal Reserve's September hike pushed short-term rates to 3.75 to 4.00 percent. Here is what $250,000 grows into at representative term-specific top rates, shown pre-tax and after a 27 percent exit tax on the same $200,000 basis used throughout this page.

Two practical notes on shopping the exchange. First, rates move weekly, and the rate quoted for your exchange is locked only when the new carrier issues, so a delayed application can re-price. Second, the new contract starts its own surrender schedule, so choose a term you can genuinely hold. If you might need liquidity sooner, a shorter term at a slightly lower rate usually beats a longer term you will surrender into charges, as our annuity surrender charge calculator shows.

Three Saver Profiles, Priced by the Engine

All three profiles below come straight from the same math the calculator runs, so you can sanity-check your own numbers against them.

The third profile deserves a comment because it shows the stakes scaling brutally. A $600,000 account renewing at 1.0 percent against 5.85 percent new money forfeits $132,499 of after-tax value over seven years. The exchange path wins decisively at every profile, at every size, and in every bracket shown, which mirrors what the break-even table already told you: the loyalty gap has to close to nearly zero before renewing is competitive.

How to Run the 1035 Exchange, Step by Step

1. Confirm your window. Read the contract's surrender-charge provision and the free-withdrawal window at the end of the guarantee period. If you cannot locate the terms, ask the carrier's service line to state the last penalty-free date in writing.
2. Shop the new contract. Compare current new-money MYGA rates across several nationally available carriers for the term you want, checking financial strength ratings before you move. The NAIC and SEC's investor education materials both publish guidance on evaluating fixed annuities.
3. Complete the 1035 exchange paperwork with the NEW carrier. The receiving carrier runs the exchange, requests the funds directly from the old carrier, and reports it as a Section 1035 exchange. Money never touches your hands, which is what preserves the tax-free treatment.
4. Watch the timeline. Exchanges commonly take two to four weeks. Submit inside your free-withdrawal window and ask the old carrier to note your intent, because a late-completing exchange that lands after the window can trigger surrender charges retroactively. Some carriers will waive this if the request was in-process, but do not rely on goodwill.
5. Confirm completion. Verify the full value arrived, that the new contract shows the correct owner and term, and that the transfer was coded as a 1035 exchange so no 1099 is generated.

One caution: a 1035 exchange is annuity-to-annuity. Swapping an annuity for a life insurance policy is allowed in the other direction only in limited configurations and is not a way to escape tax on existing gains. If your actual goal is moving money into life insurance, see our comparison of annuity versus life insurance after tax before restructuring anything.

Frequently Asked Questions

What is the renewal rate on a MYGA and why is it lower than the rate I bought at?

The renewal rate is the interest rate your carrier applies for the next guarantee period after your current one ends. It is set by the carrier, disclosed in your contract, and is frequently far below the new-money rate the same carrier advertises, because the guaranteed period you bought was priced when rates were higher. New customers get the advertised rate; existing contracts get whatever renewal rate the contract specifies.

How long do I have to move my money when a MYGA matures?

Most MYGA contracts give you a window of roughly 30 days after the end of the guarantee period to withdraw the full value or transfer it to another carrier without any surrender charge. Some contracts allow slightly longer and some states mandate a minimum window, so check your contract. If you do nothing during the window, the contract automatically renews at the carrier's renewal rate and a new surrender-charge schedule normally starts.

What is a 1035 exchange and does it trigger taxes?

A 1035 exchange, named for Section 1035 of the Internal Revenue Code, lets you swap an annuity contract for a new annuity contract with no tax event. Your entire account value, including all untaxed gains, moves to the new carrier and keeps its deferred tax status. You never touch the money, no 1099 is issued, and the exchange is reported by the carriers rather than on your tax return.

Can the insurance company keep my money if I do nothing at renewal?

No. If you take no action, the contract automatically renews under its own renewal terms and your money stays fully accessible subject to the new surrender schedule. The cost of doing nothing is opportunity cost: your account keeps compounding at the low renewal rate instead of the current new-money rate, and you may also face a fresh surrender-charge schedule if you change your mind later.

Is the interest on a MYGA taxable every year?

In a non-qualified MYGA bought with after-tax money, interest is tax-deferred, not taxed annually. You owe ordinary income tax on the gains when you withdraw them, and because annuity taxation is last-in first-out, withdrawals come out as fully taxable gains until all earnings have been distributed. Interest inside an IRA-held MYGA follows IRA tax rules instead.

What happens if I die during a MYGA?

Your beneficiary receives the full account value. The beneficiary owes ordinary income tax on the untaxed gains, but the 10 percent early-distribution penalty does not apply to distributions made on or after the annuitant's death. The full account value is also included in your taxable estate, which is one reason some owners pair a large MYGA with life insurance for estate liquidity.

Related Tools and Guides

• MYGA vs CD Calculator — the after-tax math of choosing an MYGA in the first place, at October 2026 rates.
• Annuity Surrender Charge Calculator — what exiting early really costs if you miss the free-withdrawal window.
• Annuity vs Life Insurance Calculator — when the deferred-growth vehicle should be insurance instead.
• Life Insurance vs CD — the bank-product comparison for money you may want to leave to heirs.
• Life Insurance vs Roth IRA — pairing tax-free retirement vehicles with guaranteed-rate annuities.
• IRS Publication 590-A — the official treatment of annuity contributions, taxation, and the early-distribution penalty.

Get a Life Insurance Quote Before You Move the Money

If part of the reason you are repositioning maturing annuity money is legacy or income protection, term life insurance is the cheapest way to guarantee the outcome the annuity only promises. Compare free quotes from top-rated carriers in minutes, with no obligation.