Fixed vs Variable Annuity
Fixed annuities guarantee a payout rate. Variable annuities invest in subaccounts with market upside and downside. After fees and tax, the winner depends on your time horizon and market assumptions.
| Fixed Annuity gross yield | — |
| Fixed Annuity after tax | — |
| Variable Annuity gross yield | — |
| Variable Annuity after tax | — |
| Winner | — |
Fixed vs Variable Annuity compares fixed-income alternatives by after-tax yield. Federal taxability, state-tax exemptions, and inflation indexing all change the winner depending on your tax bracket.
Taxability Matters
Federal income tax, state income tax, and AMT all affect net yield. Treasury obligations are state-tax-exempt. Municipal bonds may be fully tax-free or partially. Corporate bonds fully taxable.
Yield vs Total Return
Yield-to-maturity assumes hold to maturity. Total return includes price changes from rate movements. Long-duration bonds swing more on rate changes.
After-Tax Decision Rule
Compare after-tax yield, not gross yield. High earners in high-tax states often find munis or Treasuries beat corporates net of tax.
FDIC vs Treasury Safety
FDIC insures bank deposits to $250K per depositor per bank. Treasury obligations have full faith and credit, no cap. CDs over $250K need spreading.
Last updated May 2026. Sources: SEC Variable Annuities, IRS Pub 575.