31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

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JohnDoh
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31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by JohnDoh »

As is well known by Boglehead Savings Bonds aficianados, there is a long-running concern about the technical legality of purchasing savings bonds --- especially I Bonds --- for self and also for a revocable living trust with the same SSN. The source of the problem seems to be threefold:

1) the regulations are not as clear as they might be
2) different Treasury Direct agents give different answers to the question
3) the actual purchase experiences of different Bogleheads varies, revealing different actual practices by Treasury Direct

In this thread -- viewtopic.php?t=77584 -- (and elsewhere) sscritic (and others) point out that the governing regulation is 31 CFR 363.52:
363.52 What is the principal amount
of book-entry Series EE and Series I
savings bonds that I may acquire in
one year?
As far as I can determine, the current (2021) CFR was last updated online 11/15/2021 and the last published version is dated 2020. Some of the old threads here are from 2011. It appears that 31 CFR 363.52 was updated in 2012 and has remained unchanged since. I'm wondering if the change in the regulations can itself be cited as evidence of the proper interpretation of the rules.

2020/2021 - 31 CFR 363
https://www.ecfr.gov/current/title-31/s ... A/part-363
["Published Edition" on page left is 2020]
2020/2021 - 31 CFR 363 wrote:
§ 363.52 What is the principal amount of book-entry Series EE and Series I savings bonds that I may acquire in one year?

(a) The principal amount of book-entry savings bonds that you may acquire in any calendar year is limited to $10,000 for Series EE savings bonds and $10,000 for Series I savings bonds.

(b) Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient.

(c) Bonds purchased as gifts or in a fiduciary capacity are not included in the computation for the purchaser. Bonds received due to the death of the registered owner are not included in the computation for the recipient.

(d) We reserve the right to take any action we deem necessary to adjust the excess, including the right to remove the excess bonds from your TreasuryDirect account and refund the payment price to your bank account of record using the ACH method of payment.

[77 FR 213, Jan. 4, 2012]

2012 - 77 FR 213 [The revision to 31 CFR 363.52]
https://treasurydirect.gov/lawguide/77%20FR%20213.pdf

2012 - 77 FR 213 wrote:
■ 10. Revise § 363.52 to read as follows:

§ 363.52 What is the principal amount of
book-entry Series EE and Series I savings
bonds that I may acquire in one year?

(a) The principal amount of bookentry
savings bonds that you may
acquire in any calendar year is limited
to $10,000 for Series EE savings bonds
and $10,000 for Series I savings bonds.

(b) Bonds purchased or transferred as
gifts will be included in the
computation of this limit for the account
of the recipient for the year in which the
bonds are delivered to the recipient.

(c) Bonds purchased as gifts or in a
fiduciary capacity are not included in
the computation for the purchaser.
Bonds received due to the death of the
registered owner are not included in the
computation for the recipient.

(d) We reserve the right to take any
action we deem necessary to adjust the
excess, including the right to remove the
excess bonds from your TreasuryDirect
account and refund the payment price
to your bank account of record using the
ACH method of payment.

Mark Reger,
Acting Fiscal Assistant Secretary.
[FR Doc. 2011–33762 Filed 1–3–12; 8:45 am]

2011 - 31 CFR 363
https://www.govinfo.gov/app/details/CFR ... l2-part363
[See "Download PDF" on page left]
2011 - 31 CFR 363 wrote:
§ 363.52 What amount of book-entry
Series EE and Series I savings
bonds may I purchase in one year?

(a) Purchase limitation. The amount of
book-entry savings bonds that you may
purchase in any calendar year is limited
to $5,000 for Series EE savings
bonds and $5,000 for Series I savings
bonds.

(b) Computation of amount for gifts.
Bonds purchased or transferred as gifts
will be included in the computation of
the purchase limitation for the account
of the recipient for the year in which
the bonds are delivered to the recipient.

[67 FR 64286, Oct. 17, 2002, as amended at 68
FR 24807, May 8, 2003; 72 FR 67854, Dec. 3,
2007]

It seems that 77 FR 213 is the source of the current paragraph (c), which seems intended to clarify precisely the issue that plagues us. As sscritic points out, this language seems pretty clear on its face. It does NOT say, for example, "fiduciary for someone with a different SSN/TIN". And yet apparently many TD agents simply say "$10,000 per issue per SSN"; one said that to me, for example.

So, I'm wondering if 31 CFR 363.52 plus 77 FR 213 make an extremely compelling case "that would hold up in court" (so to speak) as a response to a TD notification of (alleged) rule violation for making maximum purchases during a single year in both a personal and a trust account with the same SSN. What say y'all?

Given all the interest in maximizing I Bond purchases and the interest on staying on the right side of the law, it would really be nice to have an ironclad answer to this.

Thanks to all. :beer
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (savings bonds).
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SonnyDMB
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by SonnyDMB »

I agree with what your pointing out. One question….has anyone ever received a notification from td they exceeded maximum annual purchase due to buying in both entity trust and individual account?

I’m not aware of any BH posters that have received such a message except for people that transfer/reissue to their trust and buy directly in their trust in the same year.
SnowBog
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by SnowBog »

My working theory is the above applies to an "account" view.

To my knowledge, you can't open more than 1 "individual" account with the same SSN, therefore at an "individual" level you are limited to $10k/year /each.

However, a trust - even if it uses your SSN (such as in a living/revocable trust) - is created as an "entity" account. For example, I have an "individual" account for "SnowBog" and an "entity" account for "SnowBog or Successor Truste(s) of SnowBog Living Trust dated X, as amended", both using my same SSN, both with my same mailing address, both even linked to the same bank account. In both, I can buy $10k/year of each I & EE Bonds.

To my knowledge, this is not - and has not - been an issue. I've done it twice this year (1x for each spouse), and have read about many others doing the same.

The primary area that I've seen which creates an issue is when people attempt to "transfer" bonds between accounts. For example, if they want all their I Bonds to be in the trust account, they might request getting those in their "individual" account reissued into the trust account. But in so doing, if > $10k were purchased within the calendar year, then you've broken the cited rules, as you are now attempting to merge purchases into a single account which would exceed the $10k limit. But if you keep them in their distinct and unique accounts, it shouldn't be a problem.
SnowBog
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by SnowBog »

One other point of clarity... When purchased in an "entity" account, it's technically the "entity" (aka trust) that is purchasing - not myself.

So I'm purchasing $10k a year for myself, and my trust is purchasing $10k a year (I just happen to be the one acting on behalf of my trust).

But the $10k belongs to the trust, not you. The structure of the trust will determine what/how/who can access those funds, including what happens after you are incapacitated/deceased.
Topic Author
JohnDoh
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Joined: Sat Nov 30, 2013 10:28 am

Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by JohnDoh »

SonnyDMB wrote: Wed Nov 17, 2021 10:47 am I agree with what your pointing out. One question….has anyone ever received a notification from td they exceeded maximum annual purchase due to buying in both entity trust and individual account?

I’m not aware of any BH posters that have received such a message except for people that transfer/reissue to their trust and buy directly in their trust in the same year.
My notice came as a result of a transfer to my new trust account. I thought I was being so smart and organized. In any case, I had no ready response and also no need to respond since they "let me off with a warning".

Older, wiser, and more cynical me now knows not to do any more transferring --- or anything else likely to get me noticed (though I have submitted two POA forms for my two TD accounts, which is causing interactions and someone looking at my accounts. But I'm hoping that will fade once completed.)

In any case, now that I know enough not to transfer bonds, I'd like to resume purchasing in each account each year, safe in the knowledge that:
1) I am not actually doing wrong
2) I have a credible pre-prepared response to any future warning I might receive, so that at worst
3) I'd have to unwind a purchase.

I really don't want to get my account(s) locked or worse, closed.

So, I guess that's my real question here. IANAL. But is this argument credible enough to pass anyone's "good faith" test?
calwatch
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by calwatch »

I think it's a very credible argument. Trusts, sole props, LLCs, etc. are considered separately from individual owners. If TD wanted to only have natural persons be able to buy savings bonds they could easily restrict entity accounts to marketable securities.
SnowBog
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by SnowBog »

Or easily check to see if > $10k was purchased for a given SSN across any number of accounts, and disallow purchases where that occurs.

But they don't...
KansasDoc
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by KansasDoc »

What about if I give money to my minor children and purchase I Bonds with their name [note this would be different that purchasing, then gifting, Ibonds]
SnowBog
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by SnowBog »

KansasDoc wrote: Wed Nov 17, 2021 5:56 pm What about if I give money to my minor children and purchase I Bonds with their name [note this would be different that purchasing, then gifting, Ibonds]
They would need an account (or a child subaccout). And your "gift" of $10k to your child means it's no longer your money, it's not "their" money. You would simply be the custodian of their money until the reach the age of majority.
comeinvest
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Re: 31 CFR 363.52 (Savings Bonds Trust Purchase Rules) Over the Years (2011 vs 2012-2020/2021)

Post by comeinvest »

Can I use only 1 trust account per SSN for yearly I-Bond purchases?
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