Selling Series I Bonds

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radstar
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Selling Series I Bonds

Post by radstar » Sun Mar 31, 2019 7:24 am

I'm trying to simplify my investment portfolio and have about 20k in Series I Bonds which I bought in 2017 as part of emergency funds. I'm thinking to sell these off to keep things simple with less accounts to manage.

What are the pros and cons about of selling Series I Bonds? I believe I will have to report this in 2019 income tax return since the bond did make couple of hundreds. How do I sell these on TreasuryDirect.gov?

Please advise. Thanks
"No one cares how much you know, until they know how much you care" - Anonymous

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Rob54keep
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Re: Selling Series I Bonds

Post by Rob54keep » Sun Mar 31, 2019 7:39 am

I just sold some I-Bonds last week on TD. Yes the deferred interest is taxable for 2019. I had my credit union details setup in TD and just redeemed them and directed them to sent to my CU. I had funds deposited in two business day! Simple and quick process.

HomeStretch
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Re: Selling Series I Bonds

Post by HomeStretch » Sun Mar 31, 2019 7:40 am

Maximize interest earned by holding I-bond until the last day of the month.

Treasury Direct’s website has instructions on how to sell electronic bonds.

TD will issue an electronic Form 1099 for sales/maturities. You log into your account for the 1099.

dcabler
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Re: Selling Series I Bonds

Post by dcabler » Sun Mar 31, 2019 7:43 am

radstar wrote:
Sun Mar 31, 2019 7:24 am
I'm trying to simplify my investment portfolio and have about 20k in Series I Bonds which I bought in 2017 as part of emergency funds. I'm thinking to sell these off to keep things simple with less accounts to manage.

What are the pros and cons about of selling Series I Bonds? I believe I will have to report this in 2019 income tax return since the bond did make couple of hundreds. How do I sell these on TreasuryDirect.gov?

Please advise. Thanks
You already identified one con. You'll pay taxes. Because you would be selling these before 5 years, you'll also lose the last 3 months interest.
Keep things simple and less to manage? There isn't anything to manage. You bought Ibonds and they just sit there earning tax-deferred interest for 30 years or until you sell them.

There are a number of threads here where people are selling them, but the primary motivation that I've seen is that they think they can earn a better interest rate. Not too many ways to do that, have an inflation adjustment, and have taxes deferred until you sell while still being reasonably liquid.

How to sell? No idea yet. My plan is to use these to generate an inflation adjusted income stream to augment Social Security when I'm 70.

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Re: Selling Series I Bonds

Post by Gill » Sun Mar 31, 2019 7:52 am

HomeStretch wrote:
Sun Mar 31, 2019 7:40 am
Maximize interest earned by holding I-bond until the last day of the month.
No, it’s just the opposite. Sell on the first day of the month, buy on the last.
Gill
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Re: Selling Series I Bonds

Post by HomeStretch » Sun Mar 31, 2019 7:57 am

Gill wrote:
Sun Mar 31, 2019 7:52 am
HomeStretch wrote:
Sun Mar 31, 2019 7:40 am
Maximize interest earned by holding I-bond until the last day of the month.
No, it’s just the opposite. Sell on the first day of the month, buy on the last.
Gill
Thanks, my post was unclear. Hold I-bonds *through* last day of the month and yes I agree sell on 1st day.

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Re: Selling Series I Bonds

Post by ishkadetto » Sun Mar 31, 2019 11:41 am

I did the same last year, sold all I bonds to simplify holdings. One less account to log into/check on/remember password for/deal with/for my spouse to deal with if anything were to happen to me. Bought Vanguard VWIUX as a replacement fund.

They will issue you a 1099.

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Re: Selling Series I Bonds

Post by stevewolfe » Sun Mar 31, 2019 11:48 am

dcabler wrote:
Sun Mar 31, 2019 7:43 am
Keep things simple and less to manage? There isn't anything to manage.
That's not true in my opinion. If something were to happen to me and my wife, no one knows they are there. Sure, we have details in our safe deposit box but good luck to my brother if he accesses our account and tells the folks at TD he did that. Immediate lock of the account. Similarly if my wife accessed my account and told them she did that (yes, we each have execute rights on the bonds owned by the other). Not to mention the account registered to redeem is in my name for bonds I'm primary on and my wife's for hers. Hope our executor didn't close those checking accounts or more hassle to get the money out.

No thanks. We sold all of our electronic bonds. I don't want to trust my wife or heirs to jump through all the hoops properly and not make a nightmare for them.

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Re: Selling Series I Bonds

Post by dcabler » Sun Mar 31, 2019 11:56 am

stevewolfe wrote:
Sun Mar 31, 2019 11:48 am
dcabler wrote:
Sun Mar 31, 2019 7:43 am
Keep things simple and less to manage? There isn't anything to manage.
That's not true in my opinion. If something were to happen to me and my wife, no one knows they are there. Sure, we have details in our safe deposit box but good luck to my brother if he accesses our account and tells the folks at TD he did that. Immediate lock of the account. Similarly if my wife accessed my account and told them she did that (yes, we each have execute rights on the bonds owned by the other). Not to mention the account registered to redeem is in my name for bonds I'm primary on and my wife's for hers. Hope our executor didn't close those checking accounts or more hassle to get the money out.

No thanks. We sold all of our electronic bonds. I don't want to trust my wife or heirs to jump through all the hoops properly and not make a nightmare for them.

Steve
How's that different than any account where somebody (the executor presumably) has to find everything?

My wife and I know how to get into each others accounts of all types and proper ownership, execute rights, etc. are fully set up. If we're both gone, then it's the executor's job to uncover all of that - and we'll make it easy for him/her.

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Re: Selling Series I Bonds

Post by Mel Lindauer » Sun Mar 31, 2019 12:05 pm

ishkadetto wrote:
Sun Mar 31, 2019 11:41 am

They will issue you a 1099.
They don't "issue you a 1099" in the same way we normally get a 1099 (in the mail prior to tax time). Rather, you have to remember to go online and print it out yourself.

I wonder how many folks forget to get their 1099 and end up.in trouble with the IRS for falling to report the interest on their tax return?
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Re: Selling Series I Bonds

Post by jj » Sun Mar 31, 2019 12:14 pm

dcabler wrote:
Sun Mar 31, 2019 11:56 am

How's that different than any account where somebody (the executor presumably) has to find everything?

My wife and I know how to get into each others accounts of all types and proper ownership, execute rights, etc. are fully set up. If we're both gone, then it's the executor's job to uncover all of that - and we'll make it easy for him/her.
To my mind the biggest risk is that the executor doesn't know about the Treasury Direct account as there is no tax paperwork each year, unless bonds have been redeemed. If one assumes that the executor uses the previous year's taxes as a guide to discovering assets held there is nothing to show that the account exists.
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Re: Selling Series I Bonds

Post by livesoft » Sun Mar 31, 2019 12:20 pm

I sold my I-bonds in 2018. It was trivial to do so via the TreasuryDirect web site. I did have to call to get my login credentials figured out, but the phone rep was superbly helpful.

As for 1099, yes, one has to remember to login to get it, but I got an e-mail in January 2019 when it was available:
TreasuryDirect 1099 Statement Information wrote:Dear Account Owner:

Please check the Investor InBox section of your TreasuryDirect account and all linked accounts, if applicable, for important tax information.

Thank you for using TreasuryDirect.

Please do not reply to this message.
That is pretty much the same as Vanguard.com when one is using e-statements and not hardcopy mailed statements, isn't it?
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Re: Selling Series I Bonds

Post by HueyLD » Sun Mar 31, 2019 12:30 pm

I used to be all for electronic savings bonds.

But the more I got involved helping others out, the less I like owning electronic bonds.

It is something to think about as one gets older because the spouse could be too old to deal with the complicated issues unique to the TD and the heir could also be clueless. Much easier with physical ones.

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Re: Selling Series I Bonds

Post by friar1610 » Sun Mar 31, 2019 12:37 pm

I have a bunch of I-Bonds, some of them with 3.4% fixed rates (to which the inflation adjustment is added). No way do I want to sell them before their time. I also have a list of all our assets, where they're held, the URLs for the web sites, the log-ins and passwords readily accessible by my spouse and/or executors. The info for Treasury Direct also has a big, bolded notice that says this is the easiest account to overlook and perhaps the most difficult to access. So I'm confident this account will not be overlooked. Meanwhile, except for occasionally looking at TD to see how much more interest I've earned, there's no "work" involved.
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Re: Selling Series I Bonds

Post by Broken Man 1999 » Sun Mar 31, 2019 12:53 pm

Not sure why all the angst concerning Treasury Direct.

The only issue I ever had was my own fault. Instead of selecting a tab, I would use the browser's back button. Once I broke my habit and actually followed directions that were clearly displayed, I enjoyed smooth sailing.

Right now my Treasury Direct account is empty, as the only I and EE bonds I had bought at Treasury Direct were very low interest rate. Not sure I had enough time for my EE bonds to double.

I redeemed my bonds over a couple of months last year, never experienced any issue, proceeds were sent to my credit union like clockwork.

So far as the 1099, I had the same experience as livesoft. Email received, logged into account, downloaded form, done. No fuss, no muss. Pretty much the same as other financial accounts I have that do not mail a 1099 form.

If any of my heirs don't know where their goodies reside, shame on me. I don't know why an account at Treasury Direct would pose any more of a communication effort to the heirs than an account at Vanguard. Why would it? Surely any estate plan would provide account info for all holdings. If one truly believes a Treasury Direct account would bamboozle their heirs, it would probably be best to leave everything in trust for them.

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Re: Selling Series I Bonds

Post by HueyLD » Sun Mar 31, 2019 1:04 pm

There is also the issue of a lack of co-ownership structure for electronic savings bonds held in TD.

With paper ones, the surviving co-owner is not forced to pay taxes on all bonds when the other co-owner dies. (S)He can take the time to do nothing, redeem a little or redeem them all, depending on the financial need, maturities and tax bracket.

However, there is not a co-owner for electronic ones and upon death of the primary owner, the secondary owner will have to pay taxes to either retitle or redeem all the bonds. It could be a very nasty surprise unless the survivor is in a zero to very low tax brackets. Good luck with that.

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Re: Selling Series I Bonds

Post by friar1610 » Sun Mar 31, 2019 1:09 pm

HueyLD wrote:
Sun Mar 31, 2019 1:04 pm
There is also the issue of a lack of co-ownership structure for electronic savings bonds held in TD.

With paper ones, the surviving co-owner is not forced to pay taxes on all bonds when the other co-owner dies. (S)He can take the time to do nothing, redeem a little or redeem them all, depending on the financial need, maturities and tax bracket.

However, there is not a co-owner for electronic ones and upon death of the primary owner, the secondary owner will have to pay taxes to either retitle or redeem all the bonds. It could be a very nasty surprise unless the survivor is in a zero to very low tax brackets. Good luck with that.
This may be something I need to understand in more detail. Is this covered anywhere on the TD site? Or are there other sources you could point me to? Thank you.
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Re: Selling Series I Bonds

Post by Broken Man 1999 » Sun Mar 31, 2019 1:24 pm

HueyLD wrote:
Sun Mar 31, 2019 1:04 pm
There is also the issue of a lack of co-ownership structure for electronic savings bonds held in TD.

With paper ones, the surviving co-owner is not forced to pay taxes on all bonds when the other co-owner dies. (S)He can take the time to do nothing, redeem a little or redeem them all, depending on the financial need, maturities and tax bracket.

However, there is not a co-owner for electronic ones and upon death of the primary owner, the secondary owner will have to pay taxes to either retitle or redeem all the bonds. It could be a very nasty surprise unless the survivor is in a zero to very low tax brackets. Good luck with that.
Can't be any worse than bonds maturing along with RMDs being required.

If I weren't so greedy I would be slowly selling the inventory of paper bonds before our RMDs start. Can't bring myself to give up any of the paper bonds as they are all paying at least 3% + inflation.

Still, any situations like these are definitely first world.

Broken Man 1999
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Re: Selling Series I Bonds

Post by HueyLD » Sun Mar 31, 2019 1:26 pm

The TD site says to call when the primary owner dies with electronic bonds. They will help the secondary owner or the beneficiary to either redeem or retitle the bonds. Since the ownership will be transferred from one owner to another person who never owned the bonds before, it will be a taxable event just like transferring e bonds to another person while the primary owner is still alive.

But taxes should only be one of the factors to consider. It may be cheaper to pay taxes than to give up a superb investment. Run your own numbers. I think an orderly redemption strategy that spreads the tax burden over several years may be something to ponder, just like Roth conversion over a period of several years.

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Re: Selling Series I Bonds

Post by Broken Man 1999 » Sun Mar 31, 2019 2:35 pm

Well, I was looking for something else and I found there is a path outlined for paper I and EE bonds to be replaced!

File a Claim for Lost, Stolen, or Destroyed Bonds
If your bonds are lost, stolen, or destroyed, you have these options:

For EE and I bonds

cash them
replace them with a bond in electronic form
For HH bonds
cash them
replace them with paper bonds
For E and H bonds
cash them
For any of those transactions, send us:

FS Form 1048 – Make sure you provide all bond serial numbers. If a bond serial number is unavailable, you must provide the following information on the form, regardless of the type of ownership for the bond:
The specific month and year of purchase
The first and last name (plus middle name or initial, if it was on the original bond)
Street address, city, and state
Taxpayer Identification Number (Social Security Number) that appeared on the bond
Final instructions

Please check each required form along with additional documents to be sure they are completed correctly, signed, and certified according to the instructions. Incomplete or inaccurate submissions will delay processing.


I always kinda figured there must be some way to accomplish this task, as otherwise citizens would be marching on Washington, DC with pitchforks, tar, and feathers!

The replacement process seems pretty easy, assuming you have some bit of info for the Treasury key on.

Broken Man 1999
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Re: Selling Series I Bonds

Post by whomever » Sun Mar 31, 2019 3:48 pm

"However, there is not a co-owner for electronic ones and upon death of the primary owner, the secondary owner will have to pay taxes to either retitle or redeem all the bonds."

Is that right, if you have registered the bond as having a secondary owner?

https://www.treasurydirect.gov/indiv/re ... edeath.htm reads:

"If a survivor is named on the bond

Series EE and Series I

As the survivor, you have three options:
Do nothing.
Redeem (cash in) the bond.
Reissue: Have the bond reissued in the survivor’s name alone."

The 'do nothing' option seems distinct from 'redeem' and 'reissue'????

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Re: Selling Series I Bonds

Post by HueyLD » Sun Mar 31, 2019 4:18 pm

The page for you link is for PAPER only. Paper, not plastic!!!

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Re: Selling Series I Bonds

Post by friar1610 » Wed Apr 03, 2019 3:56 pm

Not to beat this to death, but....

I just went on the TD web site to do the quarterly update of I-Bond values. (All of my I-Bonds are in electronic format they were purchased in "chunks" at different times. I noticed that one chunk of 3 bonds (purchased in 2014 and 2017) has the registration listed as "John Friar WITH Mary Friar". Two other chunks (purchased in 2001 and 2003) have the registration listed as "John Friar OR Mary Friar".

Is there a difference in how these two different registrations will be handled if either John or Mary dies?

My memory is a little fuzzy on this, but I know some (all?) of the 2001 and 2003 ("OR") purchases were originally paper bonds and I (wrongly, in retrospect) let myself be convinced to convert them to electronic form. The more recent ones were electronic from the get-go. I'm hoping the difference in wording may mean that taxes won't be due on those (the ones that were originally paper and were converted) until they are redeemed at maturity vs. being due when the registration changes. Does anyone have any insights on this?

Thanks for the previous answers and any new information.

EDITED to add: I just sent an email to TD via their web site asking this question but I would still appreciate the insights of anyone who might have information on this. I will provide TD's response when I receive it.

EDITED a second time for clarity. I added the italicized phrase in parentheses in the 3rd para.
Last edited by friar1610 on Thu Apr 04, 2019 9:56 am, edited 1 time in total.
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Re: Selling Series I Bonds

Post by HueyLD » Wed Apr 03, 2019 4:15 pm

Friar,

You need to call the treasury retail division because your situation appears to be unique and I don't know how to answer your question.

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Re: Selling Series I Bonds

Post by friar1610 » Wed Apr 03, 2019 5:12 pm

HueyLD wrote:
Wed Apr 03, 2019 4:15 pm
Friar,

You need to call the treasury retail division because your situation appears to be unique and I don't know how to answer your question.
Thank you. I'll see if I get an answer to my email; if not within a reasonable period I'll call them. I'd prefer to get something in writing, hencecthecemail approach.
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Re: Selling Series I Bonds

Post by tibbitts » Wed Apr 03, 2019 9:48 pm

whomever wrote:
Sun Mar 31, 2019 3:48 pm
"However, there is not a co-owner for electronic ones and upon death of the primary owner, the secondary owner will have to pay taxes to either retitle or redeem all the bonds."

Is that right, if you have registered the bond as having a secondary owner?

https://www.treasurydirect.gov/indiv/re ... edeath.htm reads:

"If a survivor is named on the bond

Series EE and Series I

As the survivor, you have three options:
Do nothing.
Redeem (cash in) the bond.
Reissue: Have the bond reissued in the survivor’s name alone."

The 'do nothing' option seems distinct from 'redeem' and 'reissue'????
I believe that is no longer the case for electronic bonds. I believe you can have a paper bond re-issued in electronic format and at the same time remove one of the two owners (leaving only a survivor), without immediately incurring taxes, but you can't do that with already-electronic bonds. I'm sure someone will correct me if I'm wrong.

So, secondary owner is not the same as co-owner and does not enjoy the same tax treatment.

On the other hand, the documentation seems inadequate for these situations for electronic vs. paper bonds, and I'm not sure why that is.

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Re: Selling Series I Bonds

Post by friar1610 » Fri Apr 05, 2019 10:31 am

I have had a couple of email exchanges with TD on this topic and here is how it went:

This was my initial question:

I have electronic I-Bonds registered to "John Friar OR Mary Friar" - my spouse - and others registered to John Friar WITH Mary Friar". I know that some of the bonds were originally paper and were subsequently converted to electronic while others were originally purchased in electronic format. But I can't specifically remember which ones I converted. In the event that either John or Mary predecease the other - this has NOT happened - and the registration is changed to the survivor, is there any difference in the tax treatment of the bonds registered as "WITH" vs. those registered as "OR"? Is tax on accumulated interest due at the time of registration change? Or at the time the bonds are finally redeemed? Are both the "WITH" and "OR" bonds covered by the same regulations with respect to tax or are they different? Thank you.

This was the initial response from TD:

Paper bonds will be connected by OR and electronic bonds will be connected by WITH. On a WITH security, the first named registrant is always accessed the taxes, either at final maturity, or at the time of redemption. On a converted paper bond, or a paper bond itself, connected by OR, the person who redeems the bond will be responsible for paying the taxes of any interest earned.

We hope this has been helpful.


This didn't really answer my question, so I wrote back:

I am still unclear on one point. In either of the cases (WITH or OR), is it necessary/required to pay tax on interest accrued to date if one named person dies and the survivor changes registration to his/her name only prior to final maturity/redemption? Example: I die next week. My widow notifies TD that she wants to re-register all of the I-Bonds in her name only and asks for TD’s assistance in doing so. (She does not want to redeem them, just re-register them in her name). Does that generate a taxable event? Does the answer to that question matter whether they are “OR” or “WITH” bonds? Or do things just continue as if I hadn’t died with the taxable event occurring when the bonds reach maturity or are redeemed? Sorry for being so dense on this but I would appreciate your clarification.

I received this response:

Hi,
When the first-named registrant of a security dies, the second-named registrant may choose to either redeem the security or have it transferred to his/her own TreasuryDirect account. The transfer to the second-named registrant's TreasuryDirect account is not a taxable event. If you have additional questions, please call us at 1-844-284-2676.


They appear to make no distinction between paper bonds and electronic bonds. They also appear not to make a distinction between electronic bonds previously converted from paper and electronic bonds initially purchased as such. So, at least based on this answer, it looks like there is no tax due on accrued interest when the registration is changed, only when bonds are redeemed.

It also looks like "OR" means the bond is either:
- paper
- originally purchased as paper but subsequently converted to electronic

Whereas "WITH" was originally purchased as electronic and remains so.

Does anyone read this differently than I do?
Friar1610

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Re: Selling Series I Bonds

Post by whomever » Fri Apr 05, 2019 12:36 pm

Friar - thank you VERY much for the legwork!

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Re: Selling Series I Bonds

Post by HueyLD » Fri Apr 05, 2019 2:43 pm

Per Treasury Reguation 31 CFR §363:

"§363.167 How will a converted savings bond be registered?

The registration of the converted bond will be the same as on the definitive bond, provided that it was registered properly in an authorized form of registration. We will change a definitive savings bond that was not registered in an authorized form of registration to the closest authorized form of registration. For example, a definitive savings bond erroneously registered “John Doe and Jane Doe” will be changed to “John Doe or Jane Doe.” We are not liable to any person for any such decision as to the closest form of authorized registration."

"§363.20 What do I need to know about the forms of registration that are available for purchases of securities through my TreasuryDirect® account?
….
(b) Forms of registration for individuals. The forms of registration available for individuals for purchases of securities made through your TreasuryDirect account are single owner, owner with beneficiary, and primary owner with secondary owner, unless the forms of registration available for a security are specifically limited by the subpart governing that security.
….
3) Primary owner with secondary owner. (i) The purchaser must be named in the registration as the primary owner with another individual as secondary owner.

(ii) The primary owner holds the securities in his or her account and may view or conduct permitted online transactions in the securities.

(iii) The primary owner may remove the secondary owner without the consent of the secondary owner.

(iv) The secondary owner has no rights to view or conduct transactions in any security unless the primary owner gives the secondary owner these rights.

(v) The primary owner may give the secondary owner the right to view any security or rights to view and conduct transactions in any security online from the account of the secondary owner.

(vi) Once the right to conduct transactions in a security has been given to the secondary owner, the primary owner may view and conduct transactions in the security from the primary owner's account, and the secondary owner may view and conduct transactions in the security using the secondary owner's own account.

(vii) The primary owner may revoke any rights previously given to the secondary owner at any time.

(viii) Upon the death of either the primary or secondary owner, the security becomes the property of the survivor, despite any attempted testamentary disposition or any applicable local law to the contrary.

(ix) If both the primary and the secondary owner die under conditions where it cannot be established, either by presumption of law or otherwise, who died first, the security is the property of the estate of the primary owner.

(x) In order for the secondary owner to obtain the security or the security proceeds after the death of the primary owner, the secondary owner must provide proof of death of the primary owner. If the secondary owner has a TreasuryDirect account, the security will be transferred to that account. If the secondary owner does not have an account, he or she may establish an account. Alternatively, a secondary owner named on a savings bond may request redemption. If the secondary owner requests redemption, he or she must provide ACH instructions.

(xi) Registration example: “John Doe, SSN 123-45-6789 with Joseph Doe, SSN 987-65-4321.”

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Re: Selling Series I Bonds

Post by DavidC » Fri Apr 05, 2019 5:43 pm

friar1610 wrote:
Fri Apr 05, 2019 10:31 am
This didn't really answer my question, so I wrote back:

I am still unclear on one point. In either of the cases (WITH or OR), is it necessary/required to pay tax on interest accrued to date if one named person dies and the survivor changes registration to his/her name only prior to final maturity/redemption? Example: I die next week. My widow notifies TD that she wants to re-register all of the I-Bonds in her name only and asks for TD’s assistance in doing so. (She does not want to redeem them, just re-register them in her name). Does that generate a taxable event? Does the answer to that question matter whether they are “OR” or “WITH” bonds? Or do things just continue as if I hadn’t died with the taxable event occurring when the bonds reach maturity or are redeemed? Sorry for being so dense on this but I would appreciate your clarification.

I received this response:

Hi,
When the first-named registrant of a security dies, the second-named registrant may choose to either redeem the security or have it transferred to his/her own TreasuryDirect account. The transfer to the second-named registrant's TreasuryDirect account is not a taxable event. If you have additional questions, please call us at 1-844-284-2676.


They appear to make no distinction between paper bonds and electronic bonds. They also appear not to make a distinction between electronic bonds previously converted from paper and electronic bonds initially purchased as such. So, at least based on this answer, it looks like there is no tax due on accrued interest when the registration is changed, only when bonds are redeemed.
This agrees with my knowledge of things: at least for the specific case of dealing with a deceased owner, definitive (paper) and book-entry (electronic) savings bonds are identical in behavior (co-owner/secondary owner can get them reissued in electronic format with taxes still deferred 1 or redeemed). The subtle differences between co-ownership of a paper (or converted electronic) bond vs. secondary ownership of an electronic bond occur in other situations when the owner is still alive: one difference is who receives the tax form when the bond is redeemed which varies per Treasury Direct's initial response to you.

1 Assuming of course the owner was already deferring the income taxes
In true boglehead fashion my chief concern is saving enough to withstand 7 consecutive biblical plagues. - TheNightsToCome

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happymob
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Re: Selling Series I Bonds

Post by happymob » Sat Apr 06, 2019 5:36 am

If you have kids (in college or below) and meet the income requirements, be aware of the tax deduction for qualified tuition plan.

anoop
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Re: Selling Series I Bonds

Post by anoop » Sat Apr 06, 2019 11:25 pm

I sold all of mine last year for the same reason -- simplifying my finances. The process for selling them on TD is very straightforward. I did have to log in to TD this year to get the 1099 (they don't send a paper one, nor do they send any sort of notification). But it's easy to figure out the number that will show on the 1099, so just keep that in your tax folder as a reminder.

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sperry8
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Location: Miami FL

Re: Selling Series I Bonds

Post by sperry8 » Mon May 13, 2019 7:54 pm

I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

Gill
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Re: Selling Series I Bonds

Post by Gill » Mon May 13, 2019 7:58 pm

sperry8 wrote:
Mon May 13, 2019 7:54 pm
I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
You can look up the fixed rate at treasury direct.gov. Yes, the rates change every six months. What do you mean by tax deductible? Tax deferred?
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

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sperry8
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Location: Miami FL

Re: Selling Series I Bonds

Post by sperry8 » Mon May 13, 2019 11:08 pm

Gill wrote:
Mon May 13, 2019 7:58 pm
sperry8 wrote:
Mon May 13, 2019 7:54 pm
I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
You can look up the fixed rate at treasury direct.gov. Yes, the rates change every six months. What do you mean by tax deductible? Tax deferred?
Gill
Yes, tax deferred is what I meant. So the rates I looked up are those described herein. So then these are the "tax deferred" rates then (at least for 6 mos). Why do the rates differ for the years (since the fixed component is 0?)
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

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billthecat
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Re: Selling Series I Bonds

Post by billthecat » Tue May 14, 2019 12:01 am

sperry8 wrote:
Mon May 13, 2019 11:08 pm
Gill wrote:
Mon May 13, 2019 7:58 pm
sperry8 wrote:
Mon May 13, 2019 7:54 pm
I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
You can look up the fixed rate at treasury direct.gov. Yes, the rates change every six months. What do you mean by tax deductible? Tax deferred?
Gill
Yes, tax deferred is what I meant. So the rates I looked up are those described herein. So then these are the "tax deferred" rates then (at least for 6 mos). Why do the rates differ for the years (since the fixed component is 0?)
It's not the years that differ, it's the months. The inflation component is adjusted every six months (May 1 and November 1) but the new rate isn't adopted by the bonds you have until the six month anniversary of the bond. So your January bonds adopt the November rate on July 1 and the May rate on January 1. Your May bond adopts the May rate on May 1 and the November rate on November 1. See how the rate is calculated.

Code: Select all

When does my bond change rates?

Issue month of your bond	New rates take effect
January		January 1 and July 1
February	February 1 and August 1
March		March 1 and September 1
April		April 1 and October 1
May		May 1 and November 1
June		June 1 and December 1
July		July 1 and January 1
August		August 1 and February 1
September	September 1 and March 1
October		October 1 and April 1
November	November 1 and May 1
December	December 1 and June 1
We cannot direct the winds but we can adjust our sails.

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sperry8
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Location: Miami FL

Re: Selling Series I Bonds

Post by sperry8 » Tue May 14, 2019 8:23 am

billthecat wrote:
Tue May 14, 2019 12:01 am
sperry8 wrote:
Mon May 13, 2019 11:08 pm
Gill wrote:
Mon May 13, 2019 7:58 pm
sperry8 wrote:
Mon May 13, 2019 7:54 pm
I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
You can look up the fixed rate at treasury direct.gov. Yes, the rates change every six months. What do you mean by tax deductible? Tax deferred?
Gill
Yes, tax deferred is what I meant. So the rates I looked up are those described herein. So then these are the "tax deferred" rates then (at least for 6 mos). Why do the rates differ for the years (since the fixed component is 0?)
It's not the years that differ, it's the months. The inflation component is adjusted every six months (May 1 and November 1) but the new rate isn't adopted by the bonds you have until the six month anniversary of the bond. So your January bonds adopt the November rate on July 1 and the May rate on January 1. Your May bond adopts the May rate on May 1 and the November rate on November 1. See how the rate is calculated.

Code: Select all

When does my bond change rates?

Issue month of your bond	New rates take effect
January		January 1 and July 1
February	February 1 and August 1
March		March 1 and September 1
April		April 1 and October 1
May		May 1 and November 1
June		June 1 and December 1
July		July 1 and January 1
August		August 1 and February 1
September	September 1 and March 1
October		October 1 and April 1
November	November 1 and May 1
December	December 1 and June 1
Very interesting. So it seems on July 1, my Jan bonds will drop to 1.4% is that correct?
Is there a way to see the interest rate history of these bonds so I can see the interest rate earned throughout the years?
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

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samsoes
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Re: Selling Series I Bonds

Post by samsoes » Tue May 14, 2019 8:30 am

sperry8 wrote:
Tue May 14, 2019 8:23 am
Very interesting. So it seems on July 1, my Jan bonds will drop to 1.4% is that correct?
Is there a way to see the interest rate history of these bonds so I can see the interest rate earned throughout the years?
This nifty site should help:
http://eyebonds.info/ibonds/index.html
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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Mel Lindauer
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Re: Selling Series I Bonds

Post by Mel Lindauer » Tue May 14, 2019 11:06 am

Just want to be sure you understand that the accumulated interest is fully taxable at the Federal level once you redeem the I Bonds (the interest is exempt from state and local taxes)
Best Regards - Mel | | Semper Fi

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sperry8
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Location: Miami FL

Re: Selling Series I Bonds

Post by sperry8 » Tue May 14, 2019 12:24 pm

samsoes wrote:
Tue May 14, 2019 8:30 am
sperry8 wrote:
Tue May 14, 2019 8:23 am
Very interesting. So it seems on July 1, my Jan bonds will drop to 1.4% is that correct?
Is there a way to see the interest rate history of these bonds so I can see the interest rate earned throughout the years?
This nifty site should help:
http://eyebonds.info/ibonds/index.html
Exactly what I needed, thanks!!

Looking at this, iBonds have definitely made me more money than the top online banks over the years... makes me rethink my position re selling them. Thanks everyone.
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

Jack FFR1846
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Re: Selling Series I Bonds

Post by Jack FFR1846 » Tue May 14, 2019 2:02 pm

What a nice reminder of how much I love my paper bonds. When I want to sell, during my noon time walk, I stop in my credit union with my paper bond. Before leaving the teller window, the funds are 100% available to withdraw. Not 2 days....not even an hour. Then when my credit union 1099 comes in, it includes the interest I've earned and the savings bond interest paid. Easy, peasey.

When I die, the wife takes paper and cashes them as needed as we're both listed on all of them. No hours on the phone (which we had to do when my dad passed with bonds in my kids names in TD). I have over $350k in paper bonds and zero in electronic.
Bogle: Smart Beta is stupid

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HueyLD
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Re: Selling Series I Bonds

Post by HueyLD » Tue May 14, 2019 2:18 pm

I learned of I bonds late and never had a chance to own the good old paper I bonds. Ah :twisted:

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billthecat
Posts: 362
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Re: Selling Series I Bonds

Post by billthecat » Tue May 14, 2019 2:27 pm

sperry8 wrote:
Tue May 14, 2019 8:23 am
billthecat wrote:
Tue May 14, 2019 12:01 am
sperry8 wrote:
Mon May 13, 2019 11:08 pm
Gill wrote:
Mon May 13, 2019 7:58 pm
sperry8 wrote:
Mon May 13, 2019 7:54 pm
I am considering liquidating my iBonds as they are now over 5 years old. Interest rates show as follows:

Jan 2013 - 2.32%
Jan 2012 - 2.32%
May 2011 - 1.4%

I assume the "fixed" rate component is 0% for all these years, correct? So the interest rates I see are "floating" and change every 6 months based on inflation, correct? And the interest rates shown are tax deductible, correct?

If I'm misunderstanding anything, let me know - thanks so much for your help!
You can look up the fixed rate at treasury direct.gov. Yes, the rates change every six months. What do you mean by tax deductible? Tax deferred?
Gill
Yes, tax deferred is what I meant. So the rates I looked up are those described herein. So then these are the "tax deferred" rates then (at least for 6 mos). Why do the rates differ for the years (since the fixed component is 0?)
It's not the years that differ, it's the months. The inflation component is adjusted every six months (May 1 and November 1) but the new rate isn't adopted by the bonds you have until the six month anniversary of the bond. So your January bonds adopt the November rate on July 1 and the May rate on January 1. Your May bond adopts the May rate on May 1 and the November rate on November 1. See how the rate is calculated.

Code: Select all

When does my bond change rates?

Issue month of your bond	New rates take effect
January		January 1 and July 1
February	February 1 and August 1
March		March 1 and September 1
April		April 1 and October 1
May		May 1 and November 1
June		June 1 and December 1
July		July 1 and January 1
August		August 1 and February 1
September	September 1 and March 1
October		October 1 and April 1
November	November 1 and May 1
December	December 1 and June 1
Very interesting. So it seems on July 1, my Jan bonds will drop to 1.4% is that correct?
Is there a way to see the interest rate history of these bonds so I can see the interest rate earned throughout the years?
Yes and I had the months reversed - I should have said that your January bonds adopt the November rate on January 1 and the May rate on July 1.
We cannot direct the winds but we can adjust our sails.

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samsoes
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Re: Selling Series I Bonds

Post by samsoes » Tue May 14, 2019 2:39 pm

HueyLD wrote:
Tue May 14, 2019 2:18 pm
I learned of I bonds late and never had a chance to own the good old paper I bonds. Ah :twisted:
You still can get paper bonds! :D

When you file your Federal tax return, include Form 8888 to get all or part of your refund in paper I-bonds.

There is a $5000 limit. Some folks purposely pay Federal estimated tax when they don't need to just to ensure a $5000 refund. It's a beautiful thing!
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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