When a certificate of deposit (CD) reaches its maturity date, many retirees are surprised by how low the renewal rates have become. After enjoying what felt like a safe, predictable return, the renewal notice often shows a dramatically reduced rate and no meaningful opportunity for growth. This leads people to ask the same question time and time again: How do I transfer a CD into an annuity? It’s a smart question, and in today’s interest-rate environment, it’s more relevant than ever.

Annuities—particularly fixed annuities and multi-year guaranteed annuities—offer something CDs can’t: higher guaranteed rates, tax-deferred growth, and the option to turn your savings into a predictable income stream that can last for life. For many retirees, those benefits make annuities a natural next step once a CD matures. The process is straightforward, but understanding the timing, the available annuity types, and the tax rules ensures your transfer is done correctly and to your advantage.

At Diversified Insurance Brokers, we work with retirees nationwide who want their savings to work harder without giving up the safety they’re accustomed to. This guide explains, in clear detail, how the CD-to-annuity process works, what types of annuities are best suited for CD transfers, and how to decide which option fits your retirement income strategy.

Why People Transfer CDs into Annuities

CDs used to be considered one of the most dependable tools for conservative savers. However, renewal rates have not kept pace with inflation or long-term retirement needs. As a result, many retirees feel trapped choosing between low-yield CDs or taking unnecessary market risk. Annuities fill this gap by offering stronger guarantees and more meaningful long-term benefits.

For example, fixed annuities and multi-year guaranteed annuities often provide significantly higher guaranteed rates than bank CDs, sometimes doubling or even tripling the available renewal rate. Beyond the interest rate itself, annuities offer tax-deferred growth, so interest is not taxed each year like CD interest. That difference alone can dramatically improve long-term accumulation. And for retirees looking ahead to the next stage of their financial life, annuities also offer something CDs never will—an option to convert your savings into a guaranteed paycheck that arrives every month for life.

This combination of higher rates, tax advantages, and lifetime income potential is why so many savers move their maturing CDs into annuities as part of a safer, more stable retirement strategy.

Which Annuities Are Best for CD Transfers?

Most retirees transferring a CD to an annuity choose from three main types. Each one serves a slightly different purpose, and the right fit depends on whether your goal is growth, safety, income, or a combination of all three.

Multi-Year Guaranteed Annuities (MYGAs)

MYGAs are the closest annuity equivalent to a CD. They offer a guaranteed rate for a set number of years—typically 2 to 10 years—while protecting 100% of your principal. However, unlike CDs, MYGA interest compounds tax-deferred, meaning you keep more of what you earn. Because many MYGAs offer higher yields than CDs, they are the most common destination for CD transfers. You can explore the structure further here: Understanding MYGAs.

Fixed Indexed Annuities (FIAs)

Fixed indexed annuities are often chosen when retirees want safety but hope for stronger long-term growth than a fixed rate alone can provide. FIAs do not place your money in the stock market—instead, your interest is based on index performance and credited using caps, spreads, or participation rates. Your principal remains protected at all times. Learn more: How Indexed Annuities Work.

Immediate Income Annuities

If your CD has matured and you now want to turn that asset into predictable monthly income, an immediate income annuity can provide payments for a set number of years or for life. These are especially popular for retirees who want to lock in income now rather than later.

The Step-By-Step Process of Transferring a CD into an Annuity

The process is simpler than most people expect, but the timing is important. When your CD matures, your bank will typically give you only a short window—often 7 to 10 days—before the funds automatically renew into a new CD. Because of this, the earlier you prepare the annuity paperwork, the smoother the transfer will be.

Step 1: Let the CD reach full maturity
If you redeem the CD early, your bank may impose a withdrawal penalty. Waiting until maturity avoids these charges and ensures you keep all your accumulated interest. Retirees who plan ahead rarely experience any delays.

Step 2: Select the appropriate annuity
Your next step is to decide whether you want a guaranteed multi-year rate, tax-deferred growth tied to an index, or immediate income. Many retirees prefer MYGAs because the structure feels similar to a CD but offers better guarantees and tax advantages.

Step 3: Complete the annuity application
This is handled through the issuing insurance company. Unlike a bank, which limits you to their CDs, annuities allow you to choose from highly rated carriers nationwide, giving you access to better rates and stronger guarantees.

Step 4: Transfer your funds
Once the annuity is approved, your CD funds are transferred in one of two ways. Some retirees withdraw the CD at maturity and send the funds directly to the insurance company. Others have their bank issue a check payable to the insurer. Either method is acceptable. As long as the CD was not inside an IRA, this process does not create any tax liability.

Step 5: Begin earning interest immediately
CD transfers typically settle in one to three business days. Your annuity begins earning interest immediately—no waiting period, no loss of principal, no loss of previously earned CD interest.

Transferring a CD Inside an IRA into an Annuity

If your CD is held inside an IRA or Roth IRA, the process is handled as a tax-free rollover. This ensures your retirement assets remain tax-deferred and avoids IRS penalties. For further reference, you can review: How Does an IRA Work? and How to Transfer an IRA to an Annuity.

A rollover from an IRA CD to an annuity is extremely common, especially for retirees looking for higher guaranteed returns without moving into the stock market.

Why Retirees Choose Annuities Instead of Renewing CDs

Many retirees reach a point where they simply cannot justify renewing their CD at a lower rate, especially when better options exist. CDs require you to pay taxes on your interest each year, which further reduces your net return. They also do not provide lifetime income options, nor do they offer a way to grow money tax-deferred.

Annuities eliminate these issues by offering higher guarantees, tax-deferral, protection against market loss, and—if you choose—guaranteed income for life. This makes annuities an attractive next step for retirees who want safety without sacrificing long-term financial security.

See How Much Guaranteed Income Your CD Could Generate

Coordinating Your CD Transfer With Other Retirement Income Sources

A CD-to-annuity transfer often becomes part of a broader retirement strategy. Many retirees blend their annuity income with Social Security, pension benefits, and withdrawals from IRAs or Roth accounts to create a predictable monthly cash-flow plan. Because annuity income is not affected by market downturns, it can significantly reduce stress during stock-market volatility and help your other investments last longer.

This level of stability is especially valuable as retirees prepare for rising healthcare costs, long-term care planning, and inflation pressures. By locking in guaranteed income or higher multi-year interest rates now, you give your retirement plan a stronger foundation.

How Diversified Insurance Brokers Supports Your CD Transfer

Choosing the right annuity is easier when you have access to multiple insurance companies rather than just one bank’s offerings. As an independent, nationwide agency, Diversified Insurance Brokers compares MYGA rates, income riders, indexed crediting options, liquidity provisions, and surrender structures to help you determine which annuity best fits your goals.

We also help ensure proper timing so you do not miss your CD maturity window, avoid penalties, and secure the highest available guaranteed rate. For retirees looking for predictable, long-term solutions, our process makes the transfer simple, efficient, and customized to your needs.

Related Pages

• What Is a Deferred Annuity?
• Simple vs. Compound Interest in Annuities
• How Does a 401k Work?
• What Is a Direct Rollover?
• How Does a TSP Work?