Gifted I-Bonds: Timing to redeem

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Topic Author
francine
Posts: 41
Joined: Wed Feb 04, 2015 12:04 pm

Gifted I-Bonds: Timing to redeem

Post by francine »

I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
BrokerageZelda
Posts: 318
Joined: Sat Apr 10, 2021 10:39 am

Re: Gifted I-Bonds: Timing to redeem

Post by BrokerageZelda »

francine wrote: Fri Jan 14, 2022 9:28 am I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
1. Five business days.

2. Only subject to the one-year restriction from the date of issue (not delivery). If you control the bond issued in your own name and it's been over 12 months since it was initially issued, you should be good.
Topic Author
francine
Posts: 41
Joined: Wed Feb 04, 2015 12:04 pm

Re: Gifted I-Bonds: Timing to redeem

Post by francine »

Thank you BrokerageZelda!
uslee2004
Posts: 185
Joined: Sun Apr 27, 2008 9:39 am
Location: NJ

Re: Gifted I-Bonds: Timing to redeem

Post by uslee2004 »

francine wrote: Fri Jan 14, 2022 9:28 am I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
I was under the impression that unlimited gifted i-bonds can be bought--per reading from prior threads. However, I just noticed this at Treasury Direct website:

How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.


This sounds like there is $10K/annual limit for each gifted i-bond recipient. Thus, OP cannot purchase $30K for each other.

Extending this further, if I have gifted my spouse $10K i-bond already this year, can I still buy another $10K this year?

Am I reading this correct? Is this a new limit? More knowledgeable one please advise. Thanks.
uslee
Topic Author
francine
Posts: 41
Joined: Wed Feb 04, 2015 12:04 pm

Re: Gifted I-Bonds: Timing to redeem

Post by francine »

uslee2004 wrote: Sat Jan 15, 2022 11:17 am
francine wrote: Fri Jan 14, 2022 9:28 am I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
I was under the impression that unlimited gifted i-bonds can be bought--per reading from prior threads. However, I just noticed this at Treasury Direct website:

How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.


This sounds like there is $10K/annual limit for each gifted i-bond recipient. Thus, OP cannot purchase $30K for each other.

Extending this further, if I have gifted my spouse $10K i-bond already this year, can I still buy another $10K this year?

Am I reading this correct? Is this a new limit? More knowledgeable one please advise. Thanks.
Good questions. Also hoping someone with more knowledge can answer these questions.
loukycpa
Posts: 248
Joined: Wed Aug 05, 2020 9:52 am

Re: Gifted I-Bonds: Timing to redeem

Post by loukycpa »

uslee2004 wrote: Sat Jan 15, 2022 11:17 am
francine wrote: Fri Jan 14, 2022 9:28 am I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
I was under the impression that unlimited gifted i-bonds can be bought--per reading from prior threads. However, I just noticed this at Treasury Direct website:

How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.


This sounds like there is $10K/annual limit for each gifted i-bond recipient. Thus, OP cannot purchase $30K for each other.

Extending this further, if I have gifted my spouse $10K i-bond already this year, can I still buy another $10K this year?

Am I reading this correct? Is this a new limit? More knowledgeable one please advise. Thanks.
The $10K annual limit per individual doesn't apply to what you buy for someone and hold in the gift box. Instead it applies in the year you deliver the gift. For example, someone else can buy $50k for the recipient on Monday next week. Then, presuming the recipient hasn't purchased any bonds in 2022, the purchaser can deliver (move from your gift box to the recipient account) $10k to the recipient the following Monday (5 business days later). Then the remaining $40k you would have to hold in the gift box until 2023 when you can then deliver another 10k, 2024 another 10k, etc. The bonds earn the going rate while in the gift box.

My spouse and I did the above in late December 2021 (purchased $80k X 2 total $160k). We delivered 10k to each other 1/1/22. Still holding the rest in the gift box ($70k X 2 total $140k). No issues.

As long as you don't mind the money being stuck in the gift box until you can deliver it out, you should be fine.
ivgrivchuck
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Joined: Sun Sep 27, 2020 6:20 pm

Re: Gifted I-Bonds: Timing to redeem

Post by ivgrivchuck »

loukycpa wrote: Sat Jan 15, 2022 2:21 pm
uslee2004 wrote: Sat Jan 15, 2022 11:17 am
francine wrote: Fri Jan 14, 2022 9:28 am I've learned from other threads that an unlimited amount of I-Bonds can be bought in the name of another person, such as a spouse, and put in the "gift box" at Treasury Direct to be gifted at a later time. My understanding is that the maximum amount that can be gifted is $10,000 per year per person. I also understand that in a year that a person is gifted the maximum $10,000, that they have reached their limit and can't purchase any more that year.

I'm unclear on the holding times required for gifted I-bonds. DH and I would like to put cash that we've accumulated into I-Bonds to bridge several years between retirement and deferred collection of Social Security. Our plan is to keep income low enough to qualify for ACA credits for myself (I'm 58), at least for a few years. I'm hoping someone can answer the following questions:

1. Is there a minimum holding time in the gift box before the bond can be delivered?

2. Is there a minimum holding time (before redeeming) for the receiver after an I-bond has been delivered?

Here is an example of what we are considering doing and how these holding times might apply:

Jan 2022: We each purchase 10K for ourselves. We each also purchase 30K for each other and put them in our gift box.

Jan 2023: Still employed, so bonds continue to accumulate interest. Gift 10K each of the 30K from the gift boxes to each other.

Jan 2024: Retire. Gift another 10K of the remaining 20K to each other.

What total amount is available to redeem for each person at this point in time? 20K or 30K?

I've read a lot of I-Bond threads, but haven't seen specific information around the timing requirements for gifted I-Bonds. Apologies if this has already been asked and answered.
I was under the impression that unlimited gifted i-bonds can be bought--per reading from prior threads. However, I just noticed this at Treasury Direct website:

How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.


This sounds like there is $10K/annual limit for each gifted i-bond recipient. Thus, OP cannot purchase $30K for each other.

Extending this further, if I have gifted my spouse $10K i-bond already this year, can I still buy another $10K this year?

Am I reading this correct? Is this a new limit? More knowledgeable one please advise. Thanks.
The $10K annual limit per individual doesn't apply to what you buy for someone and hold in the gift box. Instead it applies in the year you deliver the gift. For example, someone else can buy $50k for the recipient on Monday next week. Then, presuming the recipient hasn't purchased any bonds in 2022, the purchaser can deliver (move from your gift box to the recipient account) $10k to the recipient the following Monday (5 business days later). Then the remaining $40k you would have to hold in the gift box until 2023 when you can then deliver another 10k, 2024 another 10k, etc. The bonds earn the going rate while in the gift box.

My spouse and I did the above in late December 2021 (purchased $80k X 2 total $160k). We delivered 10k to each other 1/1/22. Still holding the rest in the gift box ($70k X 2 total $140k). No issues.

As long as you don't mind the money being stuck in the gift box until you can deliver it out, you should be fine.
I can confirm this. My wife and I have so far bought each other $50k + $50k as gifts since November. $10k + $10k has been delivered.

We intend to frontload $20k+$20k more before the end of April.

In short: Front-loading between spouses works. But the money will be stuck in the gift box for many years, so be prepared for that...
40% VTI | 40% VXUS | 13% I-bonds | 7% EE-bonds
Arena08
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Re: Gifted I-Bonds: Timing to redeem

Post by Arena08 »

Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
Average Investor
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Re: Gifted I-Bonds: Timing to redeem

Post by Average Investor »

Arena08 wrote: Sat Jan 15, 2022 5:04 pm Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
I am in email discussions with treasury right now regarding this situation, as well as the situation where the gift recipient dies before the gift is delivered. Treasury asked whether the underlying goal was to keep the bonds but I haven’t heard back anything further yet.
Tomorrow never knows.
Arena08
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Re: Gifted I-Bonds: Timing to redeem

Post by Arena08 »

Thanks for sharing Average Investor. Please do update us on what they say. I am also interested to hear what they say about the recipient passing before the gift is delivered. Great point. I looked through the FAQs on TreasuryDirect.gov, and didn't see anything addressing this. Appreciate your input.
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HueyLD
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Re: Gifted I-Bonds: Timing to redeem

Post by HueyLD »

Arena08 wrote: Sat Jan 15, 2022 5:04 pm Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
Per 31 CFR § 363.96

“What do I need to know if I initially purchase a bond as a gift?

(a) An entity may not purchase a gift savings bond.

(b) The gift bond will be registered in the name of the recipient(s). The registration is irrevocable with regard to the owner named on the gift bond.

(c) You must provide the SSN of the recipient.

(d) You may deliver the bond upon purchase, or you may hold the bond in your TreasuryDirect ® account until you are ready to deliver the bond to the owner named on the gift bond.

(e) If the purchaser dies before delivering a gift bond to the recipient, the bond belongs to the owner named on the gift bond, notwithstanding any testamentary attempts to the contrary by the purchaser, or any state law to the contrary. We will hold the bond until we receive instructions from the owner named on the gift bond.”
loukycpa
Posts: 248
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Re: Gifted I-Bonds: Timing to redeem

Post by loukycpa »

Average Investor wrote: Sat Jan 15, 2022 5:21 pm
Arena08 wrote: Sat Jan 15, 2022 5:04 pm Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
I am in email discussions with treasury right now regarding this situation, as well as the situation where the gift recipient dies before the gift is delivered. Treasury asked whether the underlying goal was to keep the bonds but I haven’t heard back anything further yet.
Interesting. Curious how the remainder of this conversation with Treasury turns out.

Perhaps as long as the intent of the purchaser is to gift out during recipient lifetime, Treasury has no problem with this strategy, no matter how much is purchased and how long it takes to get the bonds delivered out.

It would be good to know Treasury position on this.
Arena08
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Re: Gifted I-Bonds: Timing to redeem

Post by Arena08 »

HueyLD wrote: Sat Jan 15, 2022 5:51 pm
Arena08 wrote: Sat Jan 15, 2022 5:04 pm Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
Per 31 CFR § 363.96

“What do I need to know if I initially purchase a bond as a gift?

(a) An entity may not purchase a gift savings bond.

(b) The gift bond will be registered in the name of the recipient(s). The registration is irrevocable with regard to the owner named on the gift bond.

(c) You must provide the SSN of the recipient.

(d) You may deliver the bond upon purchase, or you may hold the bond in your TreasuryDirect ® account until you are ready to deliver the bond to the owner named on the gift bond.

(e) If the purchaser dies before delivering a gift bond to the recipient, the bond belongs to the owner named on the gift bond, notwithstanding any testamentary attempts to the contrary by the purchaser, or any state law to the contrary. We will hold the bond until we receive instructions from the owner named on the gift bond.”
Thanks for this HueyLD! Now we just need an answer to the part where the recipient dies before the purchaser in the spouse/spouse gift box situation.
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HueyLD
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Re: Gifted I-Bonds: Timing to redeem

Post by HueyLD »

Arena08 wrote: Sun Jan 16, 2022 8:16 am
HueyLD wrote: Sat Jan 15, 2022 5:51 pm
Arena08 wrote: Sat Jan 15, 2022 5:04 pm Great insight in this thread so far. One additional question. Let's say I had 30k in my gift box for my wife that I was delivering at a rate of 10k a year. Also assume she has secondary ownership and transact rights. What happens when I die? Can she access these bonds in my gift box and gift them to herself as she was the original recipient? Apologies if this was already addressed, I didn't see it.
Per 31 CFR § 363.96

“What do I need to know if I initially purchase a bond as a gift?

(a) An entity may not purchase a gift savings bond.

(b) The gift bond will be registered in the name of the recipient(s). The registration is irrevocable with regard to the owner named on the gift bond.

(c) You must provide the SSN of the recipient.

(d) You may deliver the bond upon purchase, or you may hold the bond in your TreasuryDirect ® account until you are ready to deliver the bond to the owner named on the gift bond.

(e) If the purchaser dies before delivering a gift bond to the recipient, the bond belongs to the owner named on the gift bond, notwithstanding any testamentary attempts to the contrary by the purchaser, or any state law to the contrary. We will hold the bond until we receive instructions from the owner named on the gift bond.”
Thanks for this HueyLD! Now we just need an answer to the part where the recipient dies before the purchaser in the spouse/spouse gift box situation.
Well, that one is likely to be based on the rule of law.

Keep in mind that bonds in the gift basket legally belong to the named recipient and the gifting decision is irrevocable. In other words, once gifted, the money is no longer yours.

So, upon the death of the named recipient, his/her heir will have to contact the Treasury Retail Division (TRD) to inherit the gifted but undelivered bonds.

My experience contacting TRD has been extremely satisfactory because of the caliber of the employees they have. However, the super sweet current rate of 7.12% has caused their phone lines and email service to be jammed up. However, their service is still much better than that of Vanguard and many other corporations.
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