Treasury Direct e-mail: undelivered gift bonds

[Lyrrad]

My uninformed guess is they're still thinking about if or how they want to implement gifts on the new TreasuryDirect system. Adding a required period would allow them to avoid adding any new purchases that might need to be migrated. There would be an unanswered question about whether the new system will support gifts.

The new system has been in development so long that I think it would be hard to have a confident prediction about when the new system will be available.

[Richard1580]

We bought a boatload of I-bonds (direct purchase and gifts) back when they had a nice return (even though the coupon was 0%). Looking forward, we will be dumping them next year and moving the funds to TIPS. Between the clunky, inefficient nature of TD, and the low yield, it just isn't worth it. I can deal with the phantom income, but I have no faith in TD.

[ladders11]

I guess there's no way I can be "downvoted" on this forum for what would be an obviously unpopular opinion, so I'll go ahead: I just do not think the treasury should offer the gift box at all.

People can give cash to anyone they want, or setup custodial accounts and irrevocable trusts to their heart's content. Both of these have become efficient, commission free, point and click, online endeavors over the last two decades. If Santa ever had me on his list with an investment gift, I'd have wanted a target date fund or a simple 60/40 index fund, not an I-Bond.

I do think the I-Bond is a great offering from our Treasury department and I would like to see it preserved for as long as possible, and the contribution limit increased in a manner that is indexed to inflation. But the gift box feels like an inefficiency, and the loophole for married couples is awkward. They have some service volume issues, so if dropping gift boxes would improve overall response times, that's a plus, too.

[Feldman]

Here is a link to the survey that anyone can view and use. The tracking info has been stripped from the link:

https://www.surveymonkey.com/r/TGPHBXG

I completed it after finding it in my Gmail SPAM folder. I think the last survey from TreasuryDirect also went there.

[matt5728]

Feldman, thank you for the non-tracking link. I took the survey anonymously.

Ladders11, I share your sentiment. I think that the gift box is a very clunky workaround to a problem that TreasuryDirect itself created: purchase limit that is too low. For those that use the gift box to purchase larger amount of bonds, raising the yearly limit would solve the problem. For those who genuinely want to gift bonds to others, TreasuryDirect could implement an immediate gifting feature that would transfer one's bonds to recipient's account, without the use of a gift box. The bond would perhaps count against the giver's limit, in the year it was purchased, but that wouldn't be a big problem if limits were increased. I am talking about a significant increase, by an order of magnitude at least. (Note that 10x increase would only bring the purchase limit to what it once was, adjusted for inflation.)

Edit: tipswatch.com has an article on the survey, complete with screenshots:
https://tipswatch.com/2025/01/08/treasu ... e-details/
I would like to add that my survey had 14 questions, while David's has 13, and TreasuryDirect email mentions 17. Also I do not recall one of the questions shown in Tipswatch article. It is possible that survey contents is dynamically created, and questions down the line depend on previous answers.

[Wrench]

I agree that the delivery period would solve one problem, but if TreasuryDirect continues to allow people to buy unlimited gift-box savings bonds and allow delivery even if the person has already reached the $10,000 limit, the loophole issue expands gigantically. You could buy 10 sets in one year and deliver them all after waiting five days (in theory). So ... I think more rules are coming that are not reflected in this survey.

Exactly! One could today build a full 30 year iBond ladder for as much as you wish as long as you have a trusted partner. Each buy $10K iBond. Then each buy 10, 20, 100 or whatever amount of gift iBonds for your partner. Then, five days later, deliver them. Instant 30 year iBond ladder that has huge flexibility in withdrawals (at least after 1, and especially 5 years), albeit at a lower yield than you can achieve today with TIPS.

Wrench

[anon_investor]

We still debating whether we should deliver our I Bonds, we each are holding 4 years worth in our gift box. We are unsure if we will buy more I Bonds this year, but want to keep our options open.

[Jaylat]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

[Lyrrad]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

The Treasury could pay a lot more than needed in interest if there were no limits and a situation where real yields on TIPS dropped below zero again. Or if 20 year bonds dropped below 3.53%.

[epoche]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

I tend to agree that they should want to issue a lot of debt at discounted rates relative to TIPS, but if I were the issuer, I'd be concerned about the uncertainty introduced by the flexible redemption terms for unlimited amounts. There could be some unforeseen consequences. What if they also increased the lock-up period with each additional tranche purchased above the base limit? I suspect there would still be some investors interested under those terms, but it would also decrease the benefit relative to TIPS.
But a large increase in the purchase limit under the current terms would likely suffice.

[SnowBog]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

Historically the Savings Bonds program was created for "regular Americans", those who probably can't max out the annual limits (and arguably shouldn't be as they should be using 401k/IRA).

I suspect that it's mostly used by higher income people than originally intended, and that would get much more tilted in that direction if limits where raised/lifted.

Feldman, thank you for the non-tracking link. I took the survey anonymously.

Ladders11, I share your sentiment. I think that the gift box is a very clunky workaround to a problem that TreasuryDirect itself created: purchase limit that is too low. For those that use the gift box to purchase larger amount of bonds, raising the yearly limit would solve the problem. For those who genuinely want to gift bonds to others, TreasuryDirect could implement an immediate gifting feature that would transfer one's bonds to recipient's account, without the use of a gift box. The bond would perhaps count against the giver's limit, in the year it was purchased, but that wouldn't be a big problem if limits were increased.

I agree, the gift box seems to be broken. I'm not sure it should be abandoned... But it doesn't make sense to allow it to "bypass" the limits...

Until the email asking us to deliver them, we'd been treating gifts as "pre-purchases", to be delivered in future years (staying within the limits every year). That seemed a reasonable interpretation and within the understood limits/rules (no "work around"). Perhaps such a use case isn't the "intent" of the gift program... But this seems "fixable" without killing it outright.

And obviously, would welcome increasing purchase limits... We also use our living trusts to buy additional I Bonds each year (which is available to anyone who wants to bother setting up one). That's arguably a bigger "workaround" to the limits - as there is no limit on the number of trusts nor a [previously assumed] need to delay delivery. Would simplify many things if the limit was raised... We'd love to not use our trusts for this purpose (those will be the first bonds we sell just to clean out the accounts).

[Mudpuppy]

Edit: tipswatch.com has an article on the survey, complete with screenshots:
https://tipswatch.com/2025/01/08/treasu ... e-details/
I would like to add that my survey had 14 questions, while David's has 13, and TreasuryDirect email mentions 17. Also I do not recall one of the questions shown in Tipswatch article. It is possible that survey contents is dynamically created, and questions down the line depend on previous answers.

It's pretty standard for survey questions to be based on responses to earlier questions, so that wouldn't surprise me. For example, they likely only ask the questions about receiving an I-Bond if you selected that you received an I-Bond for yourself or a child on the first question.

What I find interesting is that Question 2 does NOT contain a line-item for spouse, like it does for child and grandchild. As a single person who can't take advantage of the spousal gifting loophole, I wonder if that indicates a desire to turn the gift box program back to its earlier roots of gifting to children and grandchildren.

[evancox10]

interestingly , I just received a survey from treasury direct to take. it was all about how do you like to give your gifts in bonds?

it looks like they are still trying to figure it out. I apologize for not capturing the questions. it seemed to have an intent that gifts would not sit for more than a year and if someone didn't accept the gift, how it would be handled.

i didn't know not accepting the gift was a thing. it must be.

they gave 4-5 options on how long in advance would we buy a gift to delivery date. a year was the longest option on the list.

I assume the "problem" is these would basically be in "limbo" - with no ability to resolve... It isn't "your" money anymore - you gave it - as a gift [via Gift Box] to someone else. But if they refuse (or can't accept as they are dead/etc.) to accept delivery? It currently just sits there...

If state law were to come into play, at some point undelivered ibonds would be considered abandoned property and escheated to the state. But given this is in the federal domain, it seems like Treasury just kind of writes their own rules.

I wouldn’t be surprised if they implement something similar to state escheatment. As a legal principle, you don’t normally have unclaimed property sitting around for years and years. That’s the main problem with current gift box implementation (as well as the ability to workaround the annual purchase limit via sham reciprocal gifts).

[evancox10]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

I tend to agree that they should want to issue a lot of debt at discounted rates relative to TIPS, but if I were the issuer, I'd be concerned about the uncertainty introduced by the flexible redemption terms for unlimited amounts. There could be some unforeseen consequences. What if they also increased the lock-up period with each additional tranche purchased above the base limit? I suspect there would still be some investors interested under those terms, but it would also decrease the benefit relative to TIPS.
But a large increase in the purchase limit under the current terms would likely suffice.

Yes, the ability to redeem at par even when rates have increased is a very valuable option held by the purchaser, and a big disadvantage to the issuer. It’s like tails I win, heads you lose.

[1moreyr]

I assume the "problem" is these would basically be in "limbo" - with no ability to resolve... It isn't "your" money anymore - you gave it - as a gift [via Gift Box] to someone else. But if they refuse (or can't accept as they are dead/etc.) to accept delivery? It currently just sits there...

If state law were to come into play, at some point undelivered ibonds would be considered abandoned property and escheated to the state. But given this is in the federal domain, it seems like Treasury just kind of writes their own rules.

I wouldn’t be surprised if they implement something similar to state escheatment. As a legal principle, you don’t normally have unclaimed property sitting around for years and years. That’s the main problem with current gift box implementation (as well as the ability to workaround the annual purchase limit via sham reciprocal gifts).

I wouldn't either but the questions referred to an option of returning money to giver. my interpretation was that was their preference but I didn't think about your option at the time.

[Agitated_Analyst]

I tend to agree that they should want to issue a lot of debt at discounted rates relative to TIPS, but if I were the issuer, I'd be concerned about the uncertainty introduced by the flexible redemption terms for unlimited amounts. There could be some unforeseen consequences. What if they also increased the lock-up period with each additional tranche purchased above the base limit? I suspect there would still be some investors interested under those terms, but it would also decrease the benefit relative to TIPS.
But a large increase in the purchase limit under the current terms would likely suffice.

Yes, the ability to redeem at par even when rates have increased is a very valuable option held by the purchaser, and a big disadvantage to the issuer. It’s like tails I win, heads you lose.

I-bonds are essentially a government-subsidized benefit to citizens. No other entity would take the government's side of the I-bond trade, which is why they're so unique. In my opinion, the redemption of par at any time is easily worth the decrease in yield between TIPS and I-bonds.

[gammalaser]

Not sure what changes are coming, but if I were a rational human being in charge of the I Bond program I would just lift the purchase restrictions entirely. The Treasury needs to finance a huge deficit, and I Bonds are 100bp cheaper than issuing TIPS. What's not to like about that? And what societal harm is caused by allowing risk-averse investors to load up on very low risk investments?

The whole I Bond program is barely a blip on the Federal balance sheet anyway.

If limits were totally lifted, could it be possible for someone or an institution to essentially securitize and create an investment fund backed by I Bonds? Or an I Bond backed savings/deposit account?