I-series bonds-first time purchase

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healthiswealth
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Joined: Sat May 07, 2016 11:44 pm

I-series bonds-first time purchase

Post by healthiswealth »

Interested in purchasing I-series bonds for myself ($10k) and my trust(10k). This will be my first time to purchase this investment type.

Age: 46yrs
Filing: HOH
Tax bracket: 35% for 2021(32% in 2020)
401k/IRA: 1M
Non-retirement: 1M
529: 85k

Do I hold until I retire(or 30 years), I’m assuming I will be in a lower tax bracket since I will not receive a pension? From what I read, I don’t qualify to use the funds for my child’s education. Any benefits of separately investing 10k in my child’s name?


Thanks!
fabdog
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Re: I-series bonds-first time purchase

Post by fabdog »

Hold as long as you like... depending on your purpose in purchasing. You have to hold at least 1 year, and holding at least 5 years removes the 3 months of interest penalty.

You can use them for anything, including paying for your child's education. You just may not be able to take a tax deduction on the interest.

Investing in your child's name/ssn is fine, just realize that at age 18, that account needs to be converted into the child's name and they will own the bonds

Mike
dbr
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Re: I-series bonds-first time purchase

Post by dbr »

As above, you hold as long as you like. At 30 years an I bond stops paying interest and deferred interest becomes taxed. You can pay the tax annually if you want.
krafty81
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Re: I-series bonds-first time purchase

Post by krafty81 »

If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
fabdog
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Re: I-series bonds-first time purchase

Post by fabdog »

you buy for yourself in a personal account.

For your trust, you need to set up a separate entity account

https://www.treasurydirect.gov/indiv/he ... rnMore.htm

Mike
somebody_1990
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Re: I-series bonds-first time purchase

Post by somebody_1990 »

krafty81 wrote: Tue Nov 23, 2021 10:59 am If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
You can open a new account under the Revocable Trust name and purchase the I-bond with that account. Yes, same SSN can be used if the Trust doesn't have it's own EIN.
Hope it helps.
evelynmanley
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Re: I-series bonds-first time purchase

Post by evelynmanley »

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Mel Lindauer
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Re: I-series bonds-first time purchase

Post by Mel Lindauer »

healthiswealth wrote: Tue Nov 23, 2021 9:10 am Interested in purchasing I-series bonds for myself ($10k) and my trust(10k). This will be my first time to purchase this investment type.

Age: 46yrs
Filing: HOH
Tax bracket: 35% for 2021(32% in 2020)
401k/IRA: 1M
Non-retirement: 1M
529: 85k

Do I hold until I retire(or 30 years), I’m assuming I will be in a lower tax bracket since I will not receive a pension? From what I read, I don’t qualify to use the funds for my child’s education. Any benefits of separately investing 10k in my child’s name?


Thanks!
I Bonds can be great for tax shifting from when you're in a high tax bracket to when you're retired and in a lower tax bracket. They can also act as a bridge from retirement to age 70 when you'll maximize claiming your Social Security.. They also expand your tax-deferred space since taxes aren't due until you redeem them. And finally, they can also be used as an emergency fund should you lose your job or have another emergency.
Best Regards - Mel | | Semper Fi
InMyDreams
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Re: I-series bonds-first time purchase

Post by InMyDreams »

evelynmanley wrote: Tue Nov 23, 2021 12:27 pm This is a good source of info:

https://thefinancebuff.com/how-to-buy-i-bonds.html
Very useful - thank you. Explains what I did (already) and how to interpret what happened/what displays - the site's display of balances left me quite confused. I did a test run with 1k, guess I should add the 9k remainder now or wait til the beginning of December.

One other benefit - avoiding state income tax...
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Eagle33
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Re: I-series bonds-first time purchase

Post by Eagle33 »

Another first timer here for I-bonds. If we purchase $10k in 2021 and want to redeem say $5k in 2027, does proportional interest get added to the $5k or is it a portion of the $5k? And will the remaining interest remain tax-deferred?
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
BrokerageZelda
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Re: I-series bonds-first time purchase

Post by BrokerageZelda »

Eagle33 wrote: Tue Nov 23, 2021 10:32 pm Another first timer here for I-bonds. If we purchase $10k in 2021 and want to redeem say $5k in 2027, does proportional interest get added to the $5k or is it a portion of the $5k? And will the remaining interest remain tax-deferred?
Interest and principal are pro-rated for all partial withdrawals (so that all bonds with a given issue date always have the same proportion of principal to interest). Redeeming exactly $5k out of the bond in 2027 will represent a bit less than $5k worth of principal, plus some amount of interest.
LookinAround
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Re: I-series bonds-first time purchase

Post by LookinAround »

somebody_1990 wrote: Tue Nov 23, 2021 12:05 pm
krafty81 wrote: Tue Nov 23, 2021 10:59 am If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
You can open a new account under the Revocable Trust name and purchase the I-bond with that account. Yes, same SSN can be used if the Trust doesn't have it's own EIN.
Hope it helps.
Are you saying
> One can have two TD accounts where one is a personal acct AND other titled to a Revocable Living Trust where both accounts use the same SSN?
> Or does one need create an EIN for the Revocable Living trust?
RubyTuesday
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Re: I-series bonds-first time purchase

Post by RubyTuesday »

LookinAround wrote: Wed Nov 24, 2021 6:09 am
somebody_1990 wrote: Tue Nov 23, 2021 12:05 pm
krafty81 wrote: Tue Nov 23, 2021 10:59 am If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
You can open a new account under the Revocable Trust name and purchase the I-bond with that account. Yes, same SSN can be used if the Trust doesn't have it's own EIN.
Hope it helps.
Are you saying
> One can have two TD accounts where one is a personal acct AND other titled to a Revocable Living Trust where both accounts use the same SSN?
Yes

> Or does one need create an EIN for the Revocable Living trust?
Not necessary
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
z3r0c00l
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Re: I-series bonds-first time purchase

Post by z3r0c00l »

I plan to hold some I bonds for retirement spending, maybe sell one per year between the ages of 55 and 62, but they are flexible enough to also sell sooner if I need the money. One real benefit here is that you can have a portion of your long-term retirement bonds overlap with your emergency fund, an emergency fund that won't lose to inflation is a nice thing compared to a bank account right now.
75% Global Stocks / 25% I-Bonds
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noraz123
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Re: I-series bonds-first time purchase

Post by noraz123 »

LookinAround wrote: Wed Nov 24, 2021 6:09 am
somebody_1990 wrote: Tue Nov 23, 2021 12:05 pm
krafty81 wrote: Tue Nov 23, 2021 10:59 am If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
You can open a new account under the Revocable Trust name and purchase the I-bond with that account. Yes, same SSN can be used if the Trust doesn't have it's own EIN.
Hope it helps.
Are you saying
> One can have two TD accounts where one is a personal acct AND other titled to a Revocable Living Trust where both accounts use the same SSN?
> Or does one need create an EIN for the Revocable Living trust?
You can have two TD accounts with the same Ssn. This is what I have. A personal account and a trust account both tied to my Ssn.
evelynmanley
Posts: 48
Joined: Tue Sep 21, 2010 9:13 am

Re: I-series bonds-first time purchase

Post by evelynmanley »

InMyDreams wrote: Tue Nov 23, 2021 1:39 pm
evelynmanley wrote: Tue Nov 23, 2021 12:27 pm This is a good source of info:

https://thefinancebuff.com/how-to-buy-i-bonds.html
Very useful - thank you. Explains what I did (already) and how to interpret what happened/what displays - the site's display of balances left me quite confused. I did a test run with 1k, guess I should add the 9k remainder now or wait til the beginning of December.

One other benefit - avoiding state income tax...
Is this chart re: bond growth helpful? https://eyebonds.info/ibonds/home10000.html
evelynmanley
Posts: 48
Joined: Tue Sep 21, 2010 9:13 am

Re: I-series bonds-first time purchase

Post by evelynmanley »

LookinAround wrote: Wed Nov 24, 2021 6:09 am
somebody_1990 wrote: Tue Nov 23, 2021 12:05 pm
krafty81 wrote: Tue Nov 23, 2021 10:59 am If you buy 10k for yourself how do you do it for a trust? I cannot get an answer on that. I did not see that option on the website.
You can open a new account under the Revocable Trust name and purchase the I-bond with that account. Yes, same SSN can be used if the Trust doesn't have it's own EIN.
Hope it helps.
Are you saying
> One can have two TD accounts where one is a personal acct AND other titled to a Revocable Living Trust where both accounts use the same SSN?
> Or does one need create an EIN for the Revocable Living trust?
Is this link helpful? https://thefinancebuff.com/buy-more-i-b ... trust.html
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Eagle33
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Re: I-series bonds-first time purchase

Post by Eagle33 »

BrokerageZelda wrote: Wed Nov 24, 2021 12:37 am
Eagle33 wrote: Tue Nov 23, 2021 10:32 pm Another first timer here for I-bonds. If we purchase $10k in 2021 and want to redeem say $5k in 2027, does proportional interest get added to the $5k or is it a portion of the $5k? And will the remaining interest remain tax-deferred?
Interest and principal are pro-rated for all partial withdrawals (so that all bonds with a given issue date always have the same proportion of principal to interest). Redeeming exactly $5k out of the bond in 2027 will represent a bit less than $5k worth of principal, plus some amount of interest.
Thanks!
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
LookinAround
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Re: I-series bonds-first time purchase

Post by LookinAround »

noraz123 wrote: Wed Nov 24, 2021 6:29 am You can have two TD accounts with the same Ssn. This is what I have. A personal account and a trust account both tied to my Ssn.
I understand the answer may vary state-to-state but what are the estate implications? (I live in IL) Example: If I purchased 10K per account over the next 5 years, I'd have somewhere over 50K in my personal account. If I died, my personal TD account would be a non-trust asset. I do have a pour over will making my trust beneficiary of all non-trust assets.
1. I assume any money in my personal account would have to go through probate?
2. Someone told me they believe there's a particular $ value of non-trust assets which can cause in the entire estate into probate.

Wondering if you know the answers for your own case/state?
evelynmanley
Posts: 48
Joined: Tue Sep 21, 2010 9:13 am

Re: I-series bonds-first time purchase

Post by evelynmanley »

LookinAround wrote: Thu Nov 25, 2021 7:26 am
noraz123 wrote: Wed Nov 24, 2021 6:29 am You can have two TD accounts with the same Ssn. This is what I have. A personal account and a trust account both tied to my Ssn.
I understand the answer may vary state-to-state but what are the estate implications? (I live in IL) Example: If I purchased 10K per account over the next 5 years, I'd have somewhere over 50K in my personal account. If I died, my personal TD account would be a non-trust asset. I do have a pour over will making my trust beneficiary of all non-trust assets.
1. I assume any money in my personal account would have to go through probate?
2. Someone told me they believe there's a particular $ value of non-trust assets which can cause in the entire estate into probate.

Wondering if you know the answers for your own case/state?
Does this answer the question:
https://tipswatch.com/2021/09/26/i-bond ... ency-fund/

>

Avoiding probate. I Bonds don’t qualify for a step-up in cost basis at one’s death as many other investments, such as stocks and real estate, do. (I Bonds are like bank-CDs in that regard.) But you can title them in such a way as to avoid having them included in your estate subject to probate—by having either a second co-owner or a beneficiary listed on your I Bonds.>
LookinAround
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Location: Chicagoland

Re: I-series bonds-first time purchase

Post by LookinAround »

evelynmanley wrote: Thu Nov 25, 2021 8:19 am Avoiding probate. I Bonds don’t qualify for a step-up in cost basis at one’s death as many other investments, such as stocks and real estate, do. (I Bonds are like bank-CDs in that regard.) But you can title them in such a way as to avoid having them included in your estate subject to probate—by having either a second co-owner or a beneficiary listed on your I Bonds.>
Registering I Bonds in a personal account to have a POD beneficiary seems the perfect solution to avoid probate issues. Thanks!
Registering a Savings Bond: Series I
InMyDreams
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Re: I-series bonds-first time purchase

Post by InMyDreams »

evelynmanley wrote: Wed Nov 24, 2021 8:15 am
InMyDreams wrote: Tue Nov 23, 2021 1:39 pm
evelynmanley wrote: Tue Nov 23, 2021 12:27 pm This is a good source of info:

https://thefinancebuff.com/how-to-buy-i-bonds.html
Very useful - thank you. Explains what I did (already) and how to interpret what happened/what displays - the site's display of balances left me quite confused. I did a test run with 1k, guess I should add the 9k remainder now or wait til the beginning of December.

One other benefit - avoiding state income tax...
Is this chart re: bond growth helpful? https://eyebonds.info/ibonds/home10000.html
Cool. Thank you!
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