Financial Fitness / Savings Bonds

Photo:

Susan Graves

Since January 1, 2012, paper savings bonds have not been sold at financial institutions. This act came from the U.S. Department of Treasury, whose goal is to increase the number of electronic transactions. By doing so, American taxpayers will save approximately $70 million over the first five years.

However, Savings Bonds are not going away. Series EE and I are available for purchase at www.treasurydirect.gov, a secure government website. Opening a Treasury Direct account is free, and, once it's established you can:

Buy, manage, and redeem Series EE and I electronic savings bonds.

Purchase electronic savings bonds as a gift.

Enroll in a payroll savings plan for purchasing electronic bonds.

There is one way you can still purchase paper I-Bonds, if you elect to use part or all of your tax refund when you file your tax return. When you complete IRS Form 8888 you can designate your refund to be used to purchase as many paper I-Bonds as your refund amount allows, up to $5,000.

I-Bonds are bought at face value, meaning if you pay $50 (using your refund); you receive a $50 savings bond. You can also purchase I-Bonds for others including your children and your grandchildren with your tax refund.

If you’re currently holding paper savings bonds you can continue to redeem them at financial institutions, although in some cases they may have to be mailed in for redemption.

Remember that Savings Bonds are designed as longer-term investment, and generally cannot be redeemed during the first 12 months after you buy them (unless you are affected by a disaster, such as a flood, fire, hurricane, or tornado).

Also, if you redeem a savings bond within the first five years, the three most recent months' interest will be forfeited. After five years, no penalty will apply.

If you are interested in more information about Savings Bonds visit www.treasurydirect.gov.