If you’re in the market for a fixed annuity that has some growth potential, you might consider one with a Market Value Adjustment (MVA). But what exactly is MVA and how does it affect your options?

MVA is a financial calculation that can either increase or decrease the value of withdrawals and/or the surrender value of an annuity. You’ll typically find this contract feature attached to indexed annuities but it can also be found in traditional fixed annuities as well.

For instance, suppose that you’ve withdrawn more than the penalty-free amount of your annuity while interest rates are higher than they were when you first purchased it. In this scenario, the insurance company will have to pay out your withdrawal at a higher rate than what was originally contracted for which means they’ll suffer a loss that they may pass onto you in the form of a negative MVA adjustment.

This is why it’s important to talk with a retirement planner before deciding which type of annuity is right for you. An expert can help you make sense of this and any other confusing terms that come up during the process.

Stable value funds have a proven track record of offering higher returns than their money market counterparts and are an attractive retirement plan option for those looking for capital preservation as well as liquidity. However, there is a caveat to stable value funds with MVAs and that is the risk that they may be subject to an MVA or put fee if the fund is moved to another investment vehicle.