Where Should You Park $100,000 for the Next 2 Years?
If you want a guaranteed return without stock market volatility, you’re likely choosing between a U.S. Treasury Note and a Multi-Year Guaranteed Annuity (MYGA).
For California residents, state tax treatment makes a real difference in what you actually keep. Let’s run the exact math on a $100,000 deposit over a 2-year term.
Option 1: The 2-Year U.S. Treasury Note
- Guaranteed Yield: ~4.23%
- Total Interest Earned: $8,460
- The California Perk: 100% exempt from California state income tax
- Tax Paperwork: You receive a Form 1099-INT every calendar year and pay federal tax on interest as it’s paid out
Option 2: The 2-Year MYGA (Annuity)
- Guaranteed Yield: ~5.00%
- Total Interest Earned: $10,250 (compounded annually)
- The California Catch: Gains are subject to ordinary CA state income tax when you withdraw them
- Tax Paperwork: No annual tax forms — your money grows entirely tax-deferred during the 2 years
The Bottom Line After California Taxes
Even after paying a 9.3% California state tax on the annuity’s gains at the end of the term, the MYGA still nets approximately $9,297 in profit — compared to the Treasury’s $8,460.
That’s an extra +$837 in clear profit, because the MYGA’s higher 5.00% growth rate outpaces the Treasury’s tax savings.
⚠️ The Deciding Factors
Go with Treasuries if:
- You’re under age 59½ — withdrawing annuity gains before 59½ triggers a 10% IRS penalty
- You want the flexibility to sell your bonds early if plans change
Go with the MYGA if:
- You’re over age 59½
- You want to avoid annual tax paperwork
- You want to squeeze the highest guaranteed return out of your cash over the next 24 months
Please contact the local agent of TransGlobal today or call 888-831-8868.
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This article is for informational purposes only and should not be construed as financial advice or legal advice. Please consult with a professional to develop a strategy that is right for you. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. TransGlobal Advisory, LLC (TGA) does not provide legal, tax, or accounting advice. You should consult your personal tax or legal advisor before making any financial decisions.
