An EE Bond is an accrual-type instrument that earns interest monthly or semiannually (depending on the original issuance date) and pays it out when the bond is redeemed. Interest rates differ depending on when the bond was first issued. A fixed rate of interest will be paid on Series EE savings bonds issued on or after May 1, 2005. Interest is paid on EE bonds for up to 30 years.
An I Bond is an accrual-type instrument that earns interest monthly and pays it out when the bond is redeemed. The interest rate on an I bond is made up of a set rate of return and a variable semiannual rate. For up to 30 years, I bonds appreciate in value with inflation-indexed earnings.
What is a security known as a Zero-Percent Certificate of Indebtedness (Zero-Percent C of I or C of I)?
A Treasury security that pays no interest is known as a Zero-Percent Certificate of Indebtedness. Its purpose is to provide funding for the acquisition of qualifying interest-bearing securities.
What is a Payroll C of I (Payroll Zero-Percent Certificate of Indebtedness) security?
A Payroll Zero-Percent Certificate of Indebtedness (Payroll C of I) is an interest-free Treasury security. It’s designed to be used as a source of funds for buying Series EE and Series I savings bonds through TreasuryDirect’s Payroll Savings Plan.
TreasuryDirect securities are electronic, and transaction records are kept in your secure online account.
Electronic EE or I Bonds can be purchased for as little as $25 and up to $10,000 in cent increments.
T-Bills (Bills) are a type of short-term marketable security with a maturity of one year or less that is often sold at a discount. The auction results are calculated to the sixth decimal place by Treasury. Treasury rounds to the closest penny using traditional mathematical rounding procedures when computing the specific dollar amount an investment would pay. The minimum purchase is $100, and multiples can be purchased in the same increment. In a single auction, the maximum sum for a noncompetitive purchase is $5 million.
Treasury Notes are a sort of medium-term marketable security issued by the United States government.
From two to ten years Fixed-principal securities are notes. Interest payments are made after the purchase.
until final payment is made to your chosen payment location every six months
When the principal is paid off, this is called maturity. The interest rate is set by the government.
when the auction is held With multiples sold, the minimum purchase is $100.
in a similar increment The maximum amount that can be spent on a noncompetitive purchase.
$5 million can be won in a single auction.
Treasury Bonds, which are not to be confused with savings bonds, are a type of long-term fixed-principal marketable asset with maturities ranging from 10 to 30 years. Interest is paid every six months after purchase until the principle is paid at the end of the term. At the time of the auction, the interest rate is set. A $100 minimum purchase is required, and multiples are sold in the same increment. In a single auction, the maximum sum for a noncompetitive purchase is $5 million.
TIPS are a sort of marketable security with a maturity of 5 to 30 years. They have a set interest rate and the principal value is updated semiannually in accordance with changes in the Consumer Price Index – Urban (CPI-U). Interest is paid to your chosen payment destination every six months after purchase until ultimate maturity. Because the interest rate is applied to the adjusted principal, your investment is always protected against inflation. If inflation happens, your interest earned increases. During a deflationary time, you won’t lose money on your investment because Treasury pays the greater of the inflation-adjusted principal or the security’s original face value. The minimum purchase is $100, and multiples are offered at the same time. In a single auction, the maximum sum for a noncompetitive purchase is $5 million.
A FRN is a security with a variable interest rate that fluctuates over time.
Interest payments on the security will rise as interest rates rise.
In the same way, when interest rates decline, so will the security’s interest payments. To calculate an interest rate, this security uses an index rate (linked to the most recent 13-week bill rate prior to the lockout period) plus a spread (decided at auction). The index rate fluctuates on a regular basis, in this case every week, causing the interest rate to fluctuate or “float.”
Treasury Bills, Notes, Bonds, FRNs, and TIPS are examples of marketable securities that the US government sells to pay off maturing debt and raise funds to run the government. Because the owner can buy and sell them in the secondary market at current market prices, they’re considered marketable.
What are the distinctions between TreasuryDirect’s electronic marketable securities and savings bonds?
Treasury offers marketable securities such as Bills, Notes, Bonds, FRNs, and TIPS through a broker/dealer, a financial institution, or TreasuryDirect at public auction. Bidders are granted securities at the same price in an auction. The greatest rate, yield, or spread of the competing bids received determines this price. (Only noncompetitive bids are accepted by TreasuryDirect.) These securities can be bought and sold in the commercial market at market prices once they have been issued. NOTE: Legacy Treasury Direct, a separate system for marketable Treasury securities exclusively that has been accessible since 1986, is being phased out.
Series EE and I savings bonds are available for purchase at any time. These securities are exclusively available through the original issuer; they are not available on the open market. TreasuryDirect purchases of savings bonds are computerized.
Both goods can be transferred to another TreasuryDirect account because they are electronic. Marketable securities can also be moved to and from a broker/dealer, financial institution, another TreasuryDirect account, or a Legacy Treasury Direct account.
Is it possible to transfer the ownership of a savings bond?
If the savings bonds were jointly owned or if the owner specified a payable-on-death (POD) beneficiary to inherit them, they can be transferred to new owners without going through probate. Only sole owners can choose a POD beneficiary; these bonds can be jointly owned or registered in POD form, but not both.
How do I give my savings bonds to someone else?
- Any owner or co-owner of a Series EE savings bond can transfer his or her ownership rights to another person under the guidelines. A Series I savings bond with named co-owners can only be altered if one of the owners dies or divorces.
- To transfer ownership of a savings bond to a court-appointed guardian or legal representative, fill out form PDF 1455.
Can I give my child my savings bonds?
TreasuryDirect.gov makes it simple to purchase savings bonds online. They can be engraved with your name or the name of the child for whom they are being purchased. Prepare to submit the child’s entire name and Social Security number if the savings bond is to be given as a gift. The recipient must also have a TreasuryDirect account of their own. If you don’t have one, you can keep the gift in your account until you can set one up for them. Gift bonds are available in denominations ranging from $25 to $10,000.
When someone dies, what happens to their savings bonds?
- Don’t do anything. Until the bond matures, it will continue to receive interest. Our office will hold semi-annual interest payments and pay them when the bond is cashed.
- Reissue: Have the bond reissued in the name of the survivor. A coowner or beneficiary may be added to the bond by the new owner.
- Along with FS Form 5396, submit a certified copy of the owner’s death certificate (download or order). Although the bond will not be physically reissued, you will continue to receive semi-annual interest payments. (A death certificate or other legal evidence will not be returned.)
Cash (Redeem) a paper bond with a named survivor
Series EE and I: Take your savings bonds to a financial institution that accepts them and provide proper identification as well as any supporting documentation that may be necessary. It’s a good idea to phone the banking institution ahead of time to find out what kind of identification and documents you’ll need.
Your local bank is not permitted to cash Series HH bonds, but they can assist you in submitting your transaction.
HH Savings Bonds (Cashing Series)
Reissuing a paper bond with a survivor named on it
Paper reissues of Series EE and Series I bonds are no longer available. Instead, TreasuryDirect converts the bonds to electronic bonds. If you are the survivor, you can use SmartExchange to convert your bond.
Series HH: Paper reissues of these bonds are still available. Reissuing or Replacing Series HH Savings Bonds has instructions.
Is it possible to transfer EE savings bonds?
Yes. The owner of EE and I Bonds can transfer them to another person with a TreasuryDirect account; however, you must wait five business days from the purchase date to do so.
A savings bond can be transferred to another TreasuryDirect account in whole or in part. See What is the procedure for transferring savings bonds from one TreasuryDirect account to another?
What happens if I transfer savings bonds to another TreasuryDirect customer? Will the recipient’s purchasing limit be affected?
When you transfer savings bonds to another customer, the value of the transfer is deducted from the yearly purchase limit for each savings bond type for the year in which the transfer happens.
Is it possible to move marketable securities from one TreasuryDirect account to another or to a broker/dealer account?
Yes. Marketable Securities can be transferred in $100 increments. You can send a portion or the entire value of a single investment or a group of securities to a single recipient or financial institution. See What is the procedure for transferring marketable securities from my TreasuryDirect account?
No, you must transfer marketable securities from your TreasuryDirect account to a broker/dealer account in order to sell them.
The securities can be sold by the broker/dealer on your behalf.
Is it possible to transfer marketable securities from a non-TreasuryDirect account to my TreasuryDirect account?
Yes. You can contact your broker to have marketable securities from another account transferred as an Incoming External Transfer to your TreasuryDirect account. Customer Service will handle your request and add issued securities to your Current Holdings. For maturity and interest payments, incoming transfers are issued with your primary bank information as the payment destination (if applicable). For specific instructions, see Learn More About Transfers.
Is it possible to transfer marketable securities from my old TreasuryDirect account to my new TreasuryDirect account?
Yes. Complete a Security Move Request, FS Form 5179, to transfer assets from Legacy Treasury Direct to your TreasuryDirect account. Incoming transfers are deposited into your TreasuryDirect account’s Current Holdings.
What happens if I transfer a marketable security that was initially slated for deposit in my C of I before it matures?
Any purchases you have scheduled utilizing Zero-Percent C of I as the source of funds may be impacted if you elect to transfer a marketable security prior to maturity. If funds are inadequate to cover the purchase request, the purchases may be canceled.
What if the form of registration for transferring marketable securities from an outside broker to my TreasuryDirect account is invalid?
We shall refuse any inbound security transfer request that has an invalid form of registration.
What if the marketable security I want to move in from another outside account is registered with the words “OR,” “AND,” or “With Right of Survivorship”?
Regardless of the method of registration prior to the transfer, a security transferred from an outside account into a TreasuryDirect account will be transferred in the name of the individual account owner in single owner form. The registration can be changed to any allowable registration after the transfer is accomplished.
Is it possible to cash a savings bond that isn’t in your name?
If you are not identified as the owner or co-owner on the bond, you must produce legal evidence or other documentation to establish you are entitled to cash the bond, regardless of where you cash it. (Legal evidence is not returned.)
It is important to note that savings bonds cannot be transferred. You can’t cash a bond that belongs to someone else or that you bought on an internet auction site. (See Death of a Savings Bond Owner if you inherit a bond through the death of the bond owner.)
Is it possible to reissue lost savings bonds?
You can obtain a replacement electronic savings bond if your paper bond is lost, stolen, destroyed, disfigured, or you never received it. Individual savings bonds are not splittable and must be reissued in their entirety. You can request that your bond be redeemed instead of replacing it electronically.
What is the value of a savings bond after 30 years?
A $50 bond purchased for $25 30 years ago is now worth $103.68. Using the Treasury’s calculator, here are some more examples. These figures are based on historical interest rates. Interest rates will fluctuate in the future.
How can I save money on savings bonds without paying taxes?
Cashing your EE or I bonds before maturity and using the money to pay for education is one strategy to avoid paying taxes on the bond interest. The interest will not be taxable if you follow these guidelines:
- The bonds must be redeemed to pay for tuition and fees for you, your spouse, or a dependent, such as a kid listed on your tax return, at an undergraduate, graduate, or vocational school. The bonds can also be used to purchase a computer for yourself, a spouse, or a dependent. Room and board costs aren’t eligible, and grandparents can’t use this tax advantage to aid someone who isn’t classified as a dependent, such as a granddaughter.
- The bond profits must be used to pay for educational expenses in the year when the bonds are redeemed.
- High-earners are not eligible. For joint filers with modified adjusted gross incomes of more than $124,800 (more than $83,200 for other taxpayers), the interest exclusion begins to phase out and ceases when modified AGI reaches $154,800 ($98,200 for other filers).
The amount of interest you can omit is lowered proportionally if the profits from all EE and I bonds cashed in during the year exceed the qualified education expenditures paid that year.