MYGA vs Treasury Bond: Which Is Better for Conservative Money in 2026?

If you’ve already decided that part of your savings should sit in something safer than the stock market — earning a real return without putting principal at risk — you’re choosing between three main options: MYGAs (multi-year guaranteed annuities), CDs (certificates of deposit), and US Treasury bonds.

We covered MYGA vs CD separately. This piece compares the third leg: MYGA vs Treasury bond.

The short version: MYGAs typically pay more, defer taxes, and offer comparable safety in most realistic scenarios. Treasuries win on liquidity, cleaner federal-tax treatment for state-tax avoidance, and ironclad sovereign-credit safety. Both are reasonable; the right answer depends on which trade-off matters more to you.

The 60-second comparison

If the question is “which generates more after-tax return on $250k held to maturity in a moderate-tax-bracket retiree’s portfolio,” the MYGA usually wins by 50-150 basis points. If the question is “which gives me more flexibility and the cleanest safety story,” Treasuries win.

Yield: MYGA usually wins

Insurance companies invest your annuity premium in long-dated bonds, mortgages, and other fixed-income assets. They earn a spread over Treasuries (because they take some credit and liquidity risk that Treasuries don’t) and pass much of that spread back to you as a higher MYGA rate. The yield gap between top MYGAs and Treasuries of equivalent duration is typically 60-130 basis points.

In 2026:

Top 5-year MYGAs: 5.10%-5.45%
5-year Treasuries: 4.20%-4.50%
Top 10-year MYGAs: 5.25%-5.65%
10-year Treasuries: 4.30%-4.65%

On $250,000 over 5 years, the MYGA’s ~85 basis point average yield advantage compounds to about $11,500 of additional pre-tax interest — meaningful money for retirees managing income.

Tax treatment: it depends where you live and where you’ll retire

This is where it gets interesting.

Treasury interest is taxed federally as ordinary income but is exempt from state and local tax. For a retiree in California (13.3% top state rate), New York (10.9%), or Oregon (9.9%), this is a meaningful tax break. A 4.40% Treasury yield in a 9.9% state is like earning 4.84% in a state without income tax.

MYGA interest is fully tax-deferred until withdrawal. No 1099 each year. The interest compounds inside the contract. When you do withdraw, you pay ordinary income tax (federal + state) on the gain portion only.

The two tax treatments are different, not directly comparable. The MYGA’s value is in the timing of the tax (deferred to retirement); the Treasury’s value is in avoiding state tax entirely on the interest.

Worked example: $250,000, 5 years, comparison across tax scenarios

Treasury at 4.40%:

Annual interest: $11,000 (federal taxable, state-exempt)
After 5 years, you’ve received $55,000 of interest
Federal tax (24% bracket): $13,200 over 5 years
State tax: $0
Net interest after tax: $41,800

MYGA at 5.30%:

Annual interest credited (compounded): grows from $13,250 in year 1 to ~$16,253 in year 5
5-year ending balance: ~$323,776
Total gain: $73,776
Federal tax (24% on withdrawal): $17,706
State tax (varies): see scenarios below

| Scenario (state tax bracket) | Treasury net | MYGA net | |—|—:|—:| | 24% federal, 0% state (TX, FL) | $41,800 | $56,070 | | 24% federal, 5% state (most states) | $41,800 | $52,381 | | 24% federal, 9.9% state (OR) | $41,800 | $48,818 | | 24% federal, 13.3% state (CA) | $41,800 | $46,309 |

Key takeaways from the math:

The MYGA wins in every scenario for a same-bracket retiree, but the margin narrows in high-state-tax states.
The MYGA’s advantage gets larger if you’ll be in a lower bracket in retirement. The bracket arbitrage is the bigger driver than the headline yield gap.
The Treasury’s state-tax exemption is meaningful in CA, NY, OR, NJ, MA — but isn’t enough to offset the MYGA’s yield + deferral advantage in most realistic scenarios.

If you live in a no-state-income-tax state (TX, FL, WA, NV, etc.), Treasuries lose their main tax advantage and MYGAs become more clearly better.

Safety: both are very safe, in different ways

US Treasury bonds are backed by the full faith and credit of the US government. This is the safest asset in the world. The US has never defaulted on a Treasury obligation in 240+ years. If the world stops accepting US Treasuries, you have bigger problems than the bond.

MYGAs are backed by the insurance company’s general account, with state guaranty association coverage as backstop. A-rated insurance companies have enormous reserves and rigorous capital requirements. The state guaranty association exists for the rare case of carrier failure — coverage limits vary by state (most states are $100k–$250k of present value for annuity contracts; verify your state’s limit at nolhga.com).

Carrier failures in the modern era (2000-2026) have been rare and limited. Executive Life of California (1991) was the last large insurance-company failure that affected annuity holders, and policyholders were ultimately made whole through guaranty associations and successor companies — though it took years.

Practical comparison:

Treasury safety is uniform and immediate (sovereign credit, no payout delay).
MYGA safety is carrier-specific and has guaranty-association backstop (slower payout in failure scenarios, capped by state limit).

For most retail-sized positions ($250k-$500k), the practical safety difference is minimal. For very large positions ($1M+), Treasuries’ uncapped sovereign protection is genuinely safer than relying on state guaranty association limits — though spreading large MYGA balances across multiple A-rated carriers gets you most of the way there.

Liquidity: Treasuries win, by a lot

This is where Treasuries clearly beat MYGAs.

Treasuries are sellable any business day on the secondary market through any brokerage. You get the current market price, which fluctuates with interest rates — if rates have risen since you bought, you sell at a discount; if rates have fallen, you sell at a premium. The liquidity is uniform and immediate.

MYGAs are locked up for the term with two limited liquidity windows:

The 10% annual free-withdrawal allowance (no surrender charge)
Full surrender, with surrender charge per the schedule

If you might genuinely need the principal during the term — emergencies, life changes, unexpected expenses — Treasuries offer cleaner exit. MYGAs penalize early surrender to the tune of several percent in the early years, which can wipe out the yield advantage.

Practical advice: put money you’re confident you can commit for the term into the higher-yielding MYGA. Put money you might need access to into Treasuries (or a high-yield savings account, which beats short Treasuries on simplicity).

What about TIPS?

Treasury Inflation-Protected Securities (TIPS) are a variant of Treasury bonds where the principal adjusts with inflation (CPI). Yield is split into a real yield (currently 1.5%-2.0% for 5-year TIPS) plus inflation adjustment.

If you’re worried about high inflation eroding the value of a fixed MYGA rate, TIPS protect against that risk explicitly. The MYGA’s headline rate doesn’t adjust for inflation — a 5.30% MYGA stays at 5.30% even if inflation runs at 7%.

For most 2026 buyers, TIPS are a defensive position against an inflation tail-risk scenario. Real yield on TIPS is currently lower than what you’d get on a MYGA after factoring in expected inflation — but the structure is the only one that explicitly hedges against inflation surprise.

When the Treasury wins

Choose Treasuries when:

Liquidity matters. You might need access to the principal during the term.
You live in a high-state-tax state (CA, NY, NJ, OR, MA) and you want to avoid state tax on interest.
You’re putting more than your state’s MYGA guaranty limit in any single carrier — Treasuries don’t have a comparable cap.
You want the simplest possible product. Treasuries are uniformly priced, transparent, and require no carrier evaluation.
You’re building a Treasury ladder for predictable cash flow with full secondary-market liquidity.

When the MYGA wins

Choose MYGAs when:

You can commit the money for the term. No realistic chance of needing the principal early.
You want the higher yield. 60-130 basis points more than Treasuries of equivalent duration is real money.
You want tax deferral. Especially valuable if you expect to be in a lower tax bracket in retirement.
You live in a no-state-income-tax state (TX, FL, WA, NV, etc.). The Treasury’s main tax advantage doesn’t apply.
You’re rolling over an IRA or 401(k) and want a fixed-rate option inside the qualified wrapper. MYGAs accept rollovers cleanly; the qualified-money math works out the same as for Treasuries.

Both? Use a combined ladder

Many retirees end up combining both products in a structured ladder:

$50k in 1-year T-bills (immediate liquidity buffer)
$50k in 3-year Treasuries (mid-term, state-tax-exempt)
$75k in 5-year MYGA (longer term, takes the rate spread)
$75k in 7-year MYGA (longest term, biggest rate spread, biggest tax-deferral benefit)

The ladder gives you something maturing each year, smooths reinvestment-rate risk, captures the MYGA’s higher long-end rates, and preserves Treasury liquidity for the front portion. It’s how most well-advised retirees actually structure conservative money.

A licensed agent can build a personalized version in about 20 minutes once you share the numbers. The recommendation isn’t biased — agents earn commissions on MYGAs but not Treasuries, so a recommendation that includes Treasuries for the short end is a recommendation that’s putting your interests over commission.

How to actually shop

For Treasuries: any brokerage account (Schwab, Fidelity, Vanguard) lets you buy Treasuries directly with no markup. Treasury Direct (treasurydirect.gov) is also an option but the brokerage UX is generally smoother for portfolio management.

For MYGAs: rates change weekly across 20-30+ carriers, and the best rate for your state, term, and amount isn’t going to be the rate at the bank or the rate on a generic comparison site. A licensed agent runs the comparison across all appointed carriers in 30 seconds and shows you the actual best deal.

Get a MYGA comparison from a licensed LAD agent — no obligation, no pressure, comparison comes back same-day or next.

Or see this week’s top MYGA rates live to get a feel for what’s competitive.

Rates shown are illustrative as of 2026 and change weekly. State availability varies. Tax outcomes depend on individual circumstances; consult a tax advisor. State guaranty association coverage limits apply to MYGAs. Information is educational and not a recommendation. Verify current terms with a licensed agent before making any decision.