Reading Time: 7 minutes
How an Income Floor Can Help Support Retirement Spending
A market value adjustment, often called an MVA, is a feature in some annuity contracts that may change the amount you receive if you take money out of your annuity early.
An MVA can either increase or decrease the amount available to you. It generally depends on how interest rates have changed since you purchased the annuity. The National Association of Insurance Commissioners (NAIC)1 explains that an MVA could affect an annuity’s account value, cash surrender value, or death benefit value when money is withdrawn.
When does a market value adjustment apply?
An MVA usually applies when you withdraw more than the amount allowed by your contract each year or fully surrender your annuity during the surrender charge period.
It does not always apply to every withdrawal. Many annuities allow you to take out a certain amount each year without surrender charges, often up to 10%, though the rules depend on the contract.
Note that for Guaranty Income Life’s WealthChoice FIA, the MVA does NOT apply to:
- Death Benefit
- Free Partial Surrender Withdrawals & RMDs
- Guaranteed Living Benefit Rider (GLBR)
- Terminal Illness & Nursing Home Confinement
How does a market value adjustment work?
An MVA is tied to changes in the interest rate environment.
If interest rates are higher when you take money out than they were when you bought the annuity, the MVA could decrease the amount you receive.
If interest rates are lower when you take money out than they were when you bought the annuity, the MVA could increase the amount you receive.
Simple example of a market value adjustment
Let’s say you purchase an annuity with a surrender charge period. A few years later, you decide to withdraw more than your contract allows in a single year without a charge.
At that time, the insurance company will look at the contract rules and current interest rate environment.
For example:
| Scenario | Possible impact |
|---|---|
| Interest rates have gone up | Your withdrawal amount may be reduced |
| Interest rates have gone down | Your withdrawal amount may be increased |
The exact amount depends on the formula in your annuity contract. Every MVA calculation is different, so it’s important to review your contract before taking an excess withdrawal.
Is a market value adjustment the same as a surrender charge?
No. An MVA is different from a surrender charge.
A surrender charge is a fee that may apply when you take money out during the early years of your annuity. An MVA is a separate adjustment that may increase or decrease the amount you receive for a withdrawal. Investor.gov2 notes that an MVA may be in addition to any surrender charge that applies.
Why do annuities have market value adjustments?
Annuities are long-term products. An MVA helps reflect changes in interest rates when money is taken out earlier than expected.
That does not mean an MVA is always negative. Depending on interest rates and the terms of your contract, it could increase the amount you receive.
What should you ask before buying an annuity?
Before purchasing an annuity, ask:
- Does this annuity have a market value adjustment?
- When does the MVA apply?
- Are any withdrawals exempt from the MVA?
- Could the MVA affect my death benefit?
- How is the adjustment calculated?
The bottom line
An MVA is one of the contract features to understand before purchasing an annuity. It may affect how much money would be distributed upon early withdrawal or during the early years of the contract (during the surrender period).
An annuity can help support long-term retirement goals, but it’s important to understand how withdrawals, surrender charges, and market value adjustments work before you make a purchase decision.
Have questions about how an annuity works?
Talk with a financial professional to understand your options and how different features may affect your retirement strategy.
To learn more about Guaranty Income Life fixed indexed annuities, visit:
Fixed Indexed Annuities – Guaranty Income Life
Related Posts
Goals-based planning: How to connect with the next generation of clients
Learn how goals-based planning can help financial professionals connect money decisions to next-gen clients’ real-life priorities and strengthen relationships.
A Fast-Growing Small Business Niche for Financial Professionals in 2026
Discover the small business niche for financial professionals growing fastest in 2026 and how to position your practice to reach these next-gen creator clients.
Financial Education Blueprint: Building Credibility in a Trust Recession
Learn how financial professionals can use financial education to build trust, attract next-gen clients, and grow their practice in a trust recession.
1 https://content.naic.org/sites/default/files/publication-anb-lp-consumer-annuities-fixed.pdf, Accessed July 7, 2026
2https://www.investor.gov/introduction-investing/investing-basics/investment-products/annuities, Accessed July 7, 2026
If you would like to request a copy of any of these materials, please [email protected] .
GIPUB-012