Best 3-Year Fixed Annuity Rates (2026)

Today’s Best 3-Year Fixed Annuity Rates

The rate table above shows live 3-year fixed annuity rates from our best fixed annuity rates database, sourced from A-rated insurance carriers, updated every six hours via the AnnuityRateWatch API. Use the filters to narrow by state, AM Best rating, liquidity features, and investment amount.

A 3-year fixed annuity (also called a 3-year MYGA, short for Multi-Year Guaranteed Annuity) locks in a guaranteed interest rate for 36 months. Principal is protected from market loss, and interest grows tax-deferred until you withdraw it.

What Is a 3-Year Fixed Annuity?

A 3-year fixed annuity is an insurance contract that guarantees a fixed interest rate for three years. You pay a lump-sum premium, the insurer credits a locked rate, and at the end of the term you can withdraw the money, renew into a new contract, roll into another annuity tax-free via a 1035 exchange, or annuitize for income.

Because the term is short, a 3-year MYGA is the closest annuity equivalent to a 3-year bank CD. The difference: the rate is usually higher, growth is tax-deferred, and the contract is issued by a life insurance carrier rather than a bank.

A 3-year fixed annuity typically includes:

• A guaranteed interest rate for the full 36 months
• Principal protection from market losses
• Tax-deferred growth (no 1099-INT each year)
• 10% annual penalty-free withdrawal provision on most contracts
• Surrender charges if you exit before month 36
• A renewal rate or contract maturity options at the end of year 3

3-Year Fixed Annuity vs 3-Year CD

The 3-year MYGA is often compared to a 3-year bank CD because both guarantee a fixed rate for a set period and protect principal. The differences start with the issuer and end with how the IRS treats your interest.

A CD is issued by a bank and insured by the FDIC up to $250,000 per depositor. A fixed annuity is issued by an insurance company, backed by that carrier’s claims-paying ability and by your state’s guaranty association. On rate alone, 3-year MYGAs have generally paid 1.0% to 1.5% more than top 3-year CDs over the last 24 months.

Tax treatment is the bigger story. A CD issues a 1099-INT every year and you owe ordinary income tax on the interest even if you never touch the money. A fixed annuity defers that tax until you withdraw, so every dollar of interest compounds untouched for 36 months. On a $100,000 deposit in the 24% bracket, that deferral alone is worth roughly $1,200-$1,500 over three years compared to a CD at the same rate.

A 3-year MYGA may be a better fit if you:

• Want tax-deferred growth on retirement dollars
• Can leave the money untouched for 36 months
• Are over age 59½ (or comfortable waiting until then to withdraw)
• Want a higher guaranteed rate than a bank offers

A 3-year CD may be a better fit if you:

• May need the money before the term ends
• Are under age 59½ and may need early access
• Prefer FDIC insurance and a bank relationship
• Are in a low or zero tax bracket

For a full breakdown, see our fixed annuity vs CD comparison guide or run your numbers through our CD vs annuity calculator.

Should You Choose a 3-Year or a 5-Year Fixed Annuity?

Longer-term MYGAs usually pay higher rates, but not always. The yield curve, carrier strategy, and product design all play a role. As of April 14, 2026, top 5-year MYGA rates run roughly 0.30% to 0.60% higher than top 3-year rates.

The trade-off is flexibility. A 3-year contract locks you in for 36 months; a 5-year locks you in for 60. If interest rates rise during that window, the 3-year holder can reinvest at the new rate two years sooner. If rates fall, the 5-year holder wins by locking the higher rate longer.

Many buyers split the difference with a MYGA ladder, placing equal amounts into 3-year, 5-year, and 7-year contracts so a portion matures every two years. That keeps average yield competitive while preserving liquidity.

If a longer term fits your timeline, compare our best 5-year fixed annuity rates and best 7-year fixed annuity rates.

3-Year Fixed Annuity Pros and Cons

Pros:

• Short commitment. 36 months is the shortest term most carriers offer, which is useful if you are unsure about locking money up for longer.
• Guaranteed rate. No market risk, no rate changes during the term.
• Tax-deferred growth. Interest compounds without annual tax drag.
• Rate premium over CDs. Generally 1%-1.5% higher than top bank rates.
• Penalty-free withdrawals. Most contracts allow 10% per year without surrender charges.

Cons:

• Lower rate than longer terms. 5-year and 7-year MYGAs usually pay more.
• Surrender charges. Early withdrawal beyond the free amount triggers a surrender charge, typically 8%-9% in year one, declining each year.
• Pre-59½ tax penalty. The IRS adds a 10% penalty on gains withdrawn before age 59½, on top of ordinary income tax. See IRS Publication 575.
• Renewal uncertainty. When the contract matures, the insurer’s renewal rate may be lower than the original.

Who Should Buy a 3-Year Fixed Annuity?

A 3-year MYGA tends to fit a few specific situations:

• You want a short-term rate lock. If you are unsure where rates are headed but want guaranteed growth for three years, a 3-year contract commits you for the minimum practical term.
• You are laddering. A 3-year rung is the shortest rung in most MYGA ladders, providing a regular reinvestment window.
• You are parking matured annuity funds. If a longer MYGA just matured and you want to ease into a new term, three years gives you room to reassess.
• You are over age 59½ and want a tax-deferred alternative to a CD. The rate premium plus tax deferral usually wins over three years.
• You are in a high tax bracket. Tax deferral compounds harder the higher your bracket.

A 3-year MYGA is less attractive if you need liquidity within 36 months, are under age 59½ with no other reserves, or are willing to lock in longer for a meaningfully higher rate.

How Is a 3-Year Fixed Annuity Taxed?

Inside the contract, interest compounds tax-deferred. You do not receive a 1099-INT each year. You owe tax only when you withdraw.

When the 3-year term ends, you have four tax-relevant options:

• Withdraw everything. Interest portion is taxed as ordinary income in that year; principal comes back tax-free.
• Renew for a new term. Tax deferral continues; no taxable event.
• 1035 exchange to another annuity. Tax-free transfer under IRS Section 1035. Common for buyers who want a different carrier or term.
• Annuitize. Convert the balance into a stream of payments. Each payment is partly taxable (the interest portion) and partly a return of principal, using the exclusion ratio.

If you withdraw gains before age 59½, the IRS adds a 10% penalty on top of ordinary income tax. Qualified money (IRA-held annuities) follows IRA rules, not annuity rules, on the pre-59½ penalty.

What Happens When the 3-Year Term Ends?

About 30 to 60 days before the contract matures, the carrier sends a maturity notice listing your options. You typically have a 30-day window (some carriers 10-day) to make a decision. If you do nothing, most contracts auto-renew at the carrier’s current renewal rate, which is rarely the best available rate on the market.

Before that window closes, compare three things:

• The carrier’s renewal rate offer
• Current best-available 3-year, 5-year, and 7-year rates on the open market
• Your own need for liquidity versus another lock-in

If a different carrier offers a better rate, a 1035 exchange moves the money tax-free. We handle that paperwork for clients at no cost.

How to Buy a 3-Year Fixed Annuity

The process takes 15 to 30 minutes and looks roughly the same at every carrier:

• Step 1: Compare live rates. Use the table above or request a personalized rate report with your state, age, and deposit amount.
• Step 2: Review carrier financials. Check AM Best, S&P, and Moody’s ratings. We recommend A- or better.
• Step 3: Complete the application. Most carriers offer e-application. You will need ID, beneficiary info, and funding source.
• Step 4: Fund the contract. Transfer from a bank, another annuity (1035), or an IRA rollover.
• Step 5: Free-look period. Every state gives you 10 to 30 days to review the issued contract and cancel penalty-free.

My Annuity Store works with 50+ top-rated carriers and does not charge a fee for our service. You work directly with a licensed employee, never a call center.

Frequently Asked Questions

Sources & Citations

• IRS Publication 575 – Pension and Annuity Income
• FDIC Deposit Insurance
• NAIC Consumer Guide to Annuities
• National Organization of Life and Health Insurance Guaranty Associations
• AnnuityRateWatch – Live Rate Data