I Bonds Mega Thread (I Bond Heads Rejoice!)

[delrinson]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

I suspect that, come late October, the new blended rate will still be pretty high (9.62 blended with whatever). I can borrow from myself (HELOC and life insurance) at a rate markedly lower than whatever the blended rate will be. So we may do some more gifts. 2027 or 2028, anyone?

Obviously the rate will drop significantly soon enough. But, come 2023, we will have $60k worth that we can redeem to pay back any loans.

I don't see any downside to this approach...especially since, in our case, our I bonds are just a proxy for cash.

[LTCM]

At what point would we likely to see face value coupons on these i-bonds? Is it related to the federal overnight rate or the competing real world yields on 1/2/5/10/20 year treasuries?

[Richard1580]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

We bought our first I-bonds in mid 2021. Bought more at the beginning of 2022 as well as gift bonds for 2023-2025. I expect we will just let them ride for now, but if new I-bonds start having a coupon above 0%, I expect we will buy some more. Ultimately they will replace our MM as our "emergency" fund.

[Hector]

There is no doubt that variable rate for I Bonds in these 6 months (last 6 + this 6 for 12 months) had the best rate yet. At what inflation rate do you slow down or stop buying or start selling I Bonds?

I don't have $$ to buy I Bonds after funding retirement accounts and HSA. I have some equities in taxable. I can sell that, buy I Bond, and rebalance in retirement accounts. But I think that equities perform better than inflation. Also, equities are more tax efficient than I Bonds if you are not going to sell I Bonds to cover tuition expense.

I would sell equities to buy I Bonds, but if I don't have substantial carry over losses, I would miss out on deducting $3k a year. Lesser equities I have, lesser TLH I can do from now on.

[SnowBog]

There is no doubt that variable rate for I Bonds in these 6 months (last 6 + this 6 for 12 months) had the best rate yet. At what inflation rate do you slow down or stop buying or start selling I Bonds?

I don't have $$ to buy I Bonds after funding retirement accounts and HSA. I have some equities in taxable. I can sell that, buy I Bond, and rebalance in retirement accounts. But I think that equities perform better than inflation. Also, equities are more tax efficient than I Bonds if you are not going to sell I Bonds to cover tuition expense.

I would sell equities to buy I Bonds, but if I don't have substantial carry over losses, I would miss out on deducting $3k a year. Lesser equities I have, lesser TLH I can do from now on.

Personally - I would not sell equities to buy I Bonds... I believe I Bonds should be considered part of your "fixed income" (aka bond) portion of your AA. In the long term - you are best off maintaining your AA.

Now, if you had cash sitting around, or other bond/fixed income funds - considering switching those into I Bonds could be more interesting...

As to "when to stop" buying I Bonds... For myself, I was buying them years ago when the rates were much less and I'll be buying them years from now when the rates are hopefully much less. I'll be buying them until I retire. But as mentioned above, they are part of my fixed income portion of my AA (60/40). I'm also planning on using them - and my EE Bonds - to provide an "income bridge" between retirement and when our delayed social security & pensions kick in.

[Mel Lindauer]

There is no doubt that variable rate for I Bonds in these 6 months (last 6 + this 6 for 12 months) had the best rate yet. At what inflation rate do you slow down or stop buying or start selling I Bonds?

I don't have $$ to buy I Bonds after funding retirement accounts and HSA. I have some equities in taxable. I can sell that, buy I Bond, and rebalance in retirement accounts. But I think that equities perform better than inflation. Also, equities are more tax efficient than I Bonds if you are not going to sell I Bonds to cover tuition expense.

I would sell equities to buy I Bonds, but if I don't have substantial carry over losses, I would miss out on deducting $3k a year. Lesser equities I have, lesser TLH I can do from now on.

Personally - I would not sell equities to buy I Bonds... I believe I Bonds should be considered part of your "fixed income" (aka bond) portion of your AA. In the long term - you are best off maintaining your AA.

Now, if you had cash sitting around, or other bond/fixed income funds - considering switching those into I Bonds could be more interesting...

As to "when to stop" buying I Bonds... For myself, I was buying them years ago when the rates were much less and I'll be buying them years from now when the rates are hopefully much less. I'll be buying them until I retire. But as mentioned above, they are part of my fixed income portion of my AA (60/40). I'm also planning on using them - and my EE Bonds - to provide an "income bridge" between retirement and when our delayed social security & pensions kick in.

+1 My sentiments exactly. I Bonds are part of your fixed income or bond allocation.

The only time you might want to sell equities to buy I Bonds is if you were rebalancing because your equity allocation had gotten higher than your desired allocation, and you needed more bonds to rebalance back to your desired allocation.

[addicoe]

I have an LLC but it has brought in no income for like 4 years now (actually a slight loss every year). Can I still buy I bonds under this EIN or would that be a bad idea?

[holycow007]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

I suspect that, come late October, the new blended rate will still be pretty high (9.62 blended with whatever). I can borrow from myself (HELOC and life insurance) at a rate markedly lower than whatever the blended rate will be. So we may do some more gifts. 2027 or 2028, anyone?

Obviously the rate will drop significantly soon enough. But, come 2023, we will have $60k worth that we can redeem to pay back any loans.

I don't see any downside to this approach...especially since, in our case, our I bonds are just a proxy for cash.

Is there a limit on how many gift blocks?
Could I purchase 10K for myself and 30K for my wife? I understand there is a limit to delivery of those gifts and they count against that years limit. Just checking if it makes sense to take advantage of higher rates over next few cycles

[delrinson]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

I suspect that, come late October, the new blended rate will still be pretty high (9.62 blended with whatever). I can borrow from myself (HELOC and life insurance) at a rate markedly lower than whatever the blended rate will be. So we may do some more gifts. 2027 or 2028, anyone?

Obviously the rate will drop significantly soon enough. But, come 2023, we will have $60k worth that we can redeem to pay back any loans.

I don't see any downside to this approach...especially since, in our case, our I bonds are just a proxy for cash.

Is there a limit on how many gift blocks?
Could I purchase 10K for myself and 30K for my wife? I understand there is a limit to delivery of those gifts and they count against that years limit. Just checking if it makes sense to take advantage of higher rates over next few cycles

This has been debated at length. My understanding is, NO, there is no limit on the gifts you can buy. This year, you can buy $10k for yourself and, heck, $150k for your wife....but you can only DELIVER $10k per year to your wife (and she can't buy anything in said years).

[evelynmanley]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

I suspect that, come late October, the new blended rate will still be pretty high (9.62 blended with whatever). I can borrow from myself (HELOC and life insurance) at a rate markedly lower than whatever the blended rate will be. So we may do some more gifts. 2027 or 2028, anyone?

Obviously the rate will drop significantly soon enough. But, come 2023, we will have $60k worth that we can redeem to pay back any loans.

I don't see any downside to this approach...especially since, in our case, our I bonds are just a proxy for cash.

Is there a limit on how many gift blocks?
Could I purchase 10K for myself and 30K for my wife? I understand there is a limit to delivery of those gifts and they count against that years limit. Just checking if it makes sense to take advantage of higher rates over next few cycles

Not sure this answers all your questions, but might be a good resource:

Buy I Bonds as a Gift: What Works and What Doesn’t
December 27, 2021 by Harry Sit

https://thefinancebuff.com/buy-i-bonds-as-gift.html

Archives: https://thefinancebuff.com/tag/i-bonds

[GaryA505]

What would be the reason(s) not to buy several years of $10,000 gifts for your spouse, to be delivered $10,000 per year?
I can see the advantage of accumulating the interest in advance of delivering the gifts, but I'd like to hear the downsides.

[Kevin M]

What would be the reason(s) not to buy several years of $10,000 gifts for your spouse, to be delivered $10,000 per year?
I can see the advantage of accumulating the interest in advance of delivering the gifts, but I'd like to hear the downsides.

I bond composite rate drops so low in a year or two (or 3 or 4 or 5, depending on how much you buy as gifts) that it's not competitive with other investments. This applies only to those of us who are only buying them now because the high composite yield is a screaming buy. This point is covered in the Harry Sit blog post that I think someone would have linked to in this thread, maybe more than once.

For longer term investors, TIPS with real yield > 0% would be superior if purchased in a tax-advantaged account. For taxable, it would depend on your tax situation, for which the tax deferral of I bonds could be an advantage; you'd have to run the numbers.

Kevin

[SnowBog]

What would be the reason(s) not to buy several years of $10,000 gifts for your spouse, to be delivered $10,000 per year?
I can see the advantage of accumulating the interest in advance of delivering the gifts, but I'd like to hear the downsides.

Illiquidity The money is locked up for multiple years. Let's say you buy $100k - it will take at least 10 years to deliver that last $10k gift.

0% Fixed You are locking in 0% fixed interest rate. If we return to positive fixed income rates, you'll have already tied up your money and may miss the opportunity.

For what it's worth, we front loaded two years in April. I didn't feel comfortable doing more given the above. Depending on rates in January (from November), we'll either "deliver" 1 year next year, or will simply purchase another year (and keep the two year buffer).

Ultimately, I'd like to have a few "extra" years by the time we retire - as we are using I & EE Bonds to help bridge from retirement to delayed pensions/social security.

If fixed rates go back to positive territory, probably 0.5% or higher, then I'll be more tempted to front load more years in advance. Otherwise, we'll probably wait until our last few working years to "stock up" on extra I Bonds (to be delivered when we are no longer working and buying them).

[Richard1580]

What would be the reason(s) not to buy several years of $10,000 gifts for your spouse, to be delivered $10,000 per year?
I can see the advantage of accumulating the interest in advance of delivering the gifts, but I'd like to hear the downsides.

Snowbog summed it up nicely.

There are a couple of potential issues. The first is if one of you passes away unexpectedly, you now have doubled the time it will take to distribute the I-bonds. I might be mistaken about this, but I believe if you have gifted a bond to your spouse and made yourself the POD beneficiary, you don't just inherit the bond, but have to take ownership over time, keeping in mind that you can only acquire $10K of I-bonds per year.

Another issue is if new issue I-bonds start having a coupon above 0%. Obviously those would be preferable to 0% coupon I-bonds.

I front loaded gift I-bonds for myself and my wife for 2023-2025. If new I-bonds start having a coupon of 1% or more, I expect I will buy more, but for now I am content to just sit on what we have, gift them over the next three years and then use them as our "emergency" fund - adding additional ones (maybe) in 2026.

[gobel]

I confirmed its results against the new "OneCell" sheet of my I Bond Monthly Calculator Excel workbook for 290 I Bonds issued every month from September 1998 through October 2022 and valued as of November 2022.

You might want to replace "3+startperiod" with something like "row($F$3)+startperiod". This will keep the formula working if rows are deleted or inserted above the rate table.

Thanks for double-checking the results! I intended to just see how LET worked since that would obviously remove a lot of the redundancy in the long expression, but that article describing both LET and LAMBDA was the first thing I found. It's an incredible addition that I hadn't heard about yet and it seems like it could (almost) replace macros but is much more accessible to the regular excel user (and probably less of a security issue)

btw I just looked at your updated formula where you were able to replace some of the repetition with worker cells, but it seems to stop after 51 periods? It might be missing the last 4.5 years of interest payments - meaning the earliest ibonds could start to show calculation errors in the next couple of years

edited: just realized that the lambda solution has the same error (in reverse) - it needs to cap interest at 30 yrs. I added a min(360) to fix that and also made the rate columns explicit to handle shifting.

[MikeG62]

So how far out is anyone considering pushing things using gifts to spouses? Wife and I purchased $10k each for ourselves in 2021 and 2020. And then we have four $10K blocks each of gifts, meaning that gift deliveries are now extended to 2026. Which I'm fine with.

I suspect that, come late October, the new blended rate will still be pretty high (9.62 blended with whatever). I can borrow from myself (HELOC and life insurance) at a rate markedly lower than whatever the blended rate will be. So we may do some more gifts. 2027 or 2028, anyone?

Obviously the rate will drop significantly soon enough. But, come 2023, we will have $60k worth that we can redeem to pay back any loans.

I don't see any downside to this approach...especially since, in our case, our I bonds are just a proxy for cash.

The downside is that rates on I Bonds decline materially to more historical levels and you are "stuck" with these gifts that cannot be accessed for years and years while there are much better places for your money than leaving it in I Bonds. DW and I bought gifts for each other in April that we intend to deliver to one another in 2023 and 2024. We thought about going out to 2025, but thought we might have a better option for that money well before then so we decided not to bother. The same thought process would apply to the years beyond that too.

[teelainen]

[Merged into the ongoing discussion -- moderator oldcomputerguy]

Can a husband and wife both purchase I Bonds under just one TreasuryDirect online account? Or do they both need to create 2 separate TreasuryDirect online accounts?

Any tips or advice on the best way to do this?

[Kenkat]

You need two separate accounts. A TD account is tied to a specific tax id and each tax id is limited to $10,000 per year.

[arcticpineapplecorp.]

i believe it's per person. but you can actually do even more. here's how:

https://thefinancebuff.com/buy-more-i-b ... trust.html

[bigbadbuff]

My wife and I just did this last month, and also opened minor TreasuryDirect accounts for our children, was pretty straightforward to open and fund

[teelainen]

My wife and I just did this last month, and also opened minor TreasuryDirect accounts for our children, was pretty straightforward to open and fund

Did you do it all under just one TreasuryDirect account online? Or did you have to open multiple online accounts?

[arcticpineapplecorp.]

you can also do $5000 extra per tax return (not per person, though):

Taxpayers filing as Married Filing Jointly will be limited in the individual refund amount, as the combined total refund cannot exceed $5,000.
source: https://www.bogleheads.org/wiki/I_savings_bonds

[chemocean]

You need two separate accounts. A TD account is tied to a specific tax id and each tax id is limited to $10,000 per year.

Once the two accounts are set up, each of you can assign the other as a secondary owner and give full transaction rights to each other. This action would essentially make the two accounts "Joint" but the accrued interest would be charge to the primary owner's SSN

[evelynmanley]

Can a husband and wife both purchase I Bonds under just one TreasuryDirect online account? Or do they both need to create 2 separate TreasuryDirect online accounts?

Any tips or advice on the best way to do this?

This is a great article that addresses your questions:

https://thefinancebuff.com/how-to-buy-i-bonds.html

A married couple each with a trust and a self-employment business can buy up to $65,000 each calendar year, and more if they file separate tax returns, buy in their kids’ names, or buy as gifts for family members.

$10,000 in Person A’s personal account with Person B as the second owner
$10,000 in Person B’s personal account with Person A as the second owner
$10,000 in an account for Person A’s trust
$10,000 in an account for Person B’s trust
$10,000 in an account for Person A’s business
$10,000 in an account for Person B’s business
$5,000 using money from their tax refund if they file jointly (or $5,000 each if they file separately after making sure they won’t lose other tax benefits)
$10,000 in the name of each of their kids under 18
$10,000 as a gift for each member of the extended family

Harry Sit's archives re: I-bonds, a wealth of information:

https://thefinancebuff.com/tag/i-bonds

[exodusNH]

My wife and I just did this last month, and also opened minor TreasuryDirect accounts for our children, was pretty straightforward to open and fund

Did you do it all under just one TreasuryDirect account online? Or did you have to open multiple online accounts?

You need to create separate accounts, but they can share an email address and bank account.

When you create an account, you're assigned an account number in the form of A-###-###-###. You use that to log in. You'll have a separate account for each entity/SSN, but as noted can share an email address.

[ZachFinch76]

[Thread merged into here --admin LadyGeek]

Hi all

Regarding I-Bonds, my household consists of myself, my wife, and my 18 year old daughter. We should each be able to purchase up to 10K in I-Bonds, so we can technically do 30k per year, correct?

[Silk McCue]

These are individual accounts. $10k each per year. Nothing “technically” about it.

There are ways to buy more.

Cheers

[evelynmanley]

Hi all

Regarding I-Bonds, my household consists of myself, my wife, and my 18 year old daughter. We should each be able to purchase up to 10K in I-Bonds, so we can technically do 30k per year, correct?

This is a great article that addresses your question:

https://thefinancebuff.com/how-to-buy-i-bonds.html

A married couple each with a trust and a self-employment business can buy up to $65,000 each calendar year, and more if they file separate tax returns, buy in their kids’ names, or buy as gifts for family members.

$10,000 in Person A’s personal account with Person B as the second owner
$10,000 in Person B’s personal account with Person A as the second owner
$10,000 in an account for Person A’s trust
$10,000 in an account for Person B’s trust
$10,000 in an account for Person A’s business
$10,000 in an account for Person B’s business
$5,000 using money from their tax refund if they file jointly (or $5,000 each if they file separately after making sure they won’t lose other tax benefits)
$10,000 in the name of each of their kids under 18
$10,000 as a gift for each member of the extended family

Harry Sit's archives re: I-bonds, a wealth of information:

https://thefinancebuff.com/tag/i-bonds

[SnowBog]

+1

Great information shared by evelynmanley.

Specific to purchasing for your child - at 18 they'd have their own account (under 18 they'd have a "linked" minor account under a parents). As an "adult" they should be managing their own account...

But in a more general sense, highly recommend reading this https://thefinancebuff.com/buy-i-bonds-kids-name.html which lists the downsides of purchasing in a child's name.

FWIW - I only use my child's money to purchase I Bonds - and only money that they might need in the near term (otherwise its invested). I do not use them to buy "extra" for us - as at the point its purchased in their account - its their money. Instead, we have living trusts that were setup as part of our estate plan - we use those for "extra" bonds.

[dboeger1]

It's likely the links others have provided touch on this point, but it's easy to forget and potentially important to consider. Keep in mind that annual purchase/delivery limits are subject to change, and have changed in the past. This means that if you use the gift method to load on extra bonds between spouses, for example, you need to be careful to consider the possibility that you might not actually get to deliver the expected $20k annually. That's one big reason why it's generally recommended to do the gift method with caution. My wife and I bought $60k between us this year, and I would've like more, but I was not comfortable going much beyond that. If you load up on $400k of gift I-Bonds for example, you would think it would take approximately 20 years to deliver them at the current rate of $20k annually, but if they halved the amount next year, now you're talking about 40 years to deliver, which is a big difference. I'm considering buying another $20k this year depending on how the new numbers come out in November, but we would be effectively locking up quite a bit of money.

[LadyGeek]

I merged ZachFinch76's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)

[Jwulgaru]

Data point for anyone that might want to know:

4/20: Mailed Change of bank form to TD

5/5: TD emailed me to inform me they received it

5/16: Bank accounts added to TD account

[cshell2]

What would be the reason(s) not to buy several years of $10,000 gifts for your spouse, to be delivered $10,000 per year?
I can see the advantage of accumulating the interest in advance of delivering the gifts, but I'd like to hear the downsides.

For me, the disadvantage would be having the money locked up for so long. The undelivered gifts can't be accessed at all while waiting to be delivered and meanwhile, the rates could drop significantly during that time, or you could need the money.

[rocketsrule]

What's the difference in giving each other (spouse) a 10K gift versus a 10K trust?

We don't have a trust set up. Can you do both or are they interchangeable?

[evelynmanley]

What's the difference in giving each other (spouse) a 10K gift versus a 10K trust?

We don't have a trust set up. Can you do both or are they interchangeable?

These articles by Harry Sit may help answer your questions about gifts and trusts:

https://thefinancebuff.com/buy-i-bonds-as-gift.html

https://thefinancebuff.com/buy-more-i-b ... trust.html

https://thefinancebuff.com/simple-livin ... bonds.html

Archives (two pages):

https://thefinancebuff.com/tag/i-bonds

[Silk McCue]

What's the difference in giving each other (spouse) a 10K gift versus a 10K trust?

We don't have a trust set up. Can you do both or are they interchangeable?

A trust or other vehicles allow annual purchases in addition to personal limits. Spousal gifting allows you to purchase future year contribution limits now.

Cheers

[GaryA505]

I received my single $5000 tax refund I-Bond on Monday. Now, if they ever get my wife's account approved, we'll buy another $10000.