Financial institutions discontinued issuing paper versions of Series EE and Series I savings bonds on January 1, 2012. Many of us still own bonds in paper form, even though any bonds purchased after this date are stored electronically. Since the United States Treasury shut down the Savings Bond Wizard in May 2018, you have two options for getting information about your paper savings bonds:
- Visit www.treasurydirect.gov/ to use the Savings Bond Calculator. indiv/tools/tools savingsbondcalc.htm
Converting your US savings bonds to an electronic version allows you to examine their current rate and value, as well as the interest received and the tax implications of cashing them now or at maturity, which is crucial as you plan for retirement.
A tool called SmartExchange can help you convert your paper bonds to electronic bonds. After you’ve gathered your paper bonds and sorted them by registration, go to www.treasurydirect.gov/ R S / U N – A c c o u n t C r e ate.do to create an account. Mail your paper bonds to the US Treasury after you’ve set up your online account. You can convert paper bonds from Series E, EE, or I. Series H and HH bonds cannot be converted since they must be redeemed through the US Treasury and cannot be redeemed at a local financial institution.
Converting paper bonds to an electronic format is helpful for various reasons:
- You will be able to log in to your account at any time, seven days a week. The current values will be displayed clearly.
- There is no need to store bonds or be concerned about them being lost, stolen, or damaged.
- Bond registration can be changed, although some bonds will require a signed owner release.
- Bond proceeds can be automatically paid into your bank account or deposited into a Zero-Percent Certificate of Indemnity for future TreasuryDirect online purchases. Keep in mind that when the bonds reach maturity, they will be automatically redeemed. The owner will not be able to choose when to redeem the bonds and pay tax on the accumulated interest because interest will be reported in the year of maturity. This can be a benefit if you want to reinvest the proceeds, or it can be a disadvantage if the tax consequences are unforeseen.
While transferring bonds to an electronic version takes some time, the effort is well worth it. Savings bonds should be stored and managed safely at all stages of life, but especially as you prepare for and enter retirement.
Is it possible to cash paper bonds electronically?
As long as you’re the owner or co-owner of a paper or electronic savings bond, you can cash it in at most financial institutions, either online or by mail. Others who aren’t listed on the bond might need to take further precautions.
What am I supposed to do with these paper bonds?
If you hold Series E or EE bonds released after 1974, you can use the Treasury Hunt tool to determine if any bonds registered with your Social Security number have stopped paying interest.
If your savings bonds have reached maturity, you should cash them in and invest the proceeds elsewhere. Whether you have paper bonds, check with your bank to see if they cash them (not all banks do, and some will cash in savings bonds only for customers who have had accounts for at least six months). See How to Cash in Savings Bonds for more information.
Can you transfer paper bonds?
Because of the following reasons, electronic securities provide you with more flexibility and convenience than paper securities:
- You can cash your electronic bonds in whole or in part at any time 24 hours a day, seven days a week and have the funds deposited into a savings or checking account of your choice. You don’t need to go to a bank, and once the minimal requirements are satisfied, there are no limits on the number of bonds or their value that can be cashed at any given moment.
- At any time, you can see your online holdings and their current valuations. You don’t have to be concerned about paper securities being misplaced or destroyed.
- At any moment, you can amend the bond registration or transfer the securities to a different account. (There are some ownership restrictions, and transfers may trigger a taxable event.)
- When electronic bonds reach their full maturity and no longer generate interest, they will be immediately paid out and the proceeds put into your Primary Account’s Zero-Percent C of I. You can utilize the proceeds in full or in part to buy additional securities or cash the C of I into your bank account.
Is TreasuryDirect.gov a secure site?
Bonds purchased through TreasuryDirect are kept safe in your account with the US Treasury. You have till they develop or you redeem them, whichever comes first. Using savings bonds to pay for some college expenses also provides additional federal tax benefits if all conditions are met.
Is it possible to cash savings bonds that are not 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.)
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.
What is the value of a $100 savings bond dated 1999?
A $100 series I bond issued in July 1999, for example, was worth $201.52 at the time of publishing, 12 years later.
What should I do with my savings bonds that have reached maturity?
Your link has finally matured after three decades of waiting. If you wish to cash in your bonds, you must follow specific requirements depending on the type of bond you have (paper or electronic).
- You can cash electronic savings bonds on the TreasuryDirect website, and you’ll get your money in two days.
- Most major financial institutions, such as your local bank, accept paper savings bonds.
If you can’t find your fully matured paper savings bond, you can have it electronically replaced by going to the TreasuryDirect website and filling out the necessary papers.
You’ll need the serial number of the bond, which serves as a unique identity. If this isn’t accessible, you’ll need other information, such as the exact month and year the bond was purchased, the owner’s Social Security number, and the names and addresses of the bond’s owners. Even if you’ve misplaced the bond, it’s possible to find it with a few efforts.
You can keep your bond after it matures, but you will not get any extra interest. On the one hand, because you can’t spend a savings bond without redeeming it, the value of your bonds is considered “secure.” On the other side, if your bond isn’t redeemed, you’ll miss out on additional sources of interest. With current inflation rates, it doesn’t make much sense to hold a bond that pays nothing and is losing money to inflation every day.
Finally, regardless of whether you redeem your bonds or not, you will owe taxes on them when they mature. In the year of maturity, make sure to include all earned and previously unreported interest on your tax return. If you don’t, you may be subject to a tax penalty for underpayment.