Do Most Fixed-Rate Annuities Have Any Associated Fees?
Most fixed-rate annuities (MYGAs) have no explicit annual fees — but surrender charges, MVAs, and rider costs can absolutely bite. Here is the full fee map.
The Honest Answer
Most fixed-rate annuities (MYGAs) carry no explicit annual fees — no management fee, no mortality and expense charge, no administrative fee. The insurer's profit is built into the spread between what they earn on their bond portfolio and the rate they credit you. That makes MYGAs the cleanest fee structure in the annuity universe.
But "no annual fee" is not the same as "no costs." There are three real charges you need to understand before signing.
The Three Costs That Actually Exist
| Cost | Typical Range | When It Applies |
|---|---|---|
| Annual management fee | $0 | Never (this is the headline benefit) |
| Surrender charge | 1–9% of withdrawal | Years 1–7+ if you withdraw above the free amount |
| Market Value Adjustment (MVA) | Variable | Early withdrawal when rates have risen |
| Optional rider fee | 0.25–1.50% / yr | Only if you add an income or death benefit rider |
Surrender Charges Explained
A 5-year MYGA might allow 10% free withdrawals per year without penalty. Touch more than that and the surrender schedule kicks in:
This is the cost of the rate guarantee. The insurer needs to know your money is staying put so they can match it against long-duration bonds. Match the term to your actual time horizon and the surrender charge becomes irrelevant — you simply do not touch the money early.
Market Value Adjustment (MVA)
If you withdraw early and interest rates have risen since you bought, the MVA reduces your withdrawal further. If rates have fallen, the MVA can actually increase what you receive. It is a two-way adjustment that protects the insurer's bond portfolio from being liquidated at a loss.
Not every MYGA has an MVA — about half do. If you want maximum simplicity, ask for an MYGA without an MVA.
How MYGA Fees Compare to Other Annuities
- No annual M&E charge (variable annuities: 1.00–1.50%)
- No sub-account fund fees (variable annuities: 0.50–2.00%)
- No mandatory rider fees (indexed annuities w/ income rider: 0.95–1.50%)
- Surrender charges are predictable and disclosed up front
- Surrender charges are long (5–10 years) and steep early on
- MVAs add complexity and can surprise unprepared buyers
- Free-withdrawal allowance is limited (usually 10% per year)
- No upside if rates spike — your rate is locked for the term
The Bottom Line
For a buyer who knows they will not need the money during the surrender period, a top MYGA in 2026 is effectively fee-free. You earn the full quoted rate, every year, with no drag. Compare that yield against the best CDs of the same term and high-yield savings before deciding — the annuity often wins on rate, but the CD wins on simplicity and FDIC backing.
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