An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

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justsomeguy2018
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by justsomeguy2018 »

dalbright wrote: Mon Mar 28, 2022 5:35 am Thank you for those posting in this thread and the OP. The prior links were helpful as well. I just went through the gift process this morning as I had set money set aside for the next two years for I or EE bond purchases (depending on rates for the year) for my spouse and I. I will confirm tomorrow when everything processes but this is far better than the .5% ally was giving. Perfect timing considering this is the end of the month as well! This is my preferred "floor" for our retirement as its easily changeable after the hold periods
So is the main benefit to the gifting that you're accumulating additional high interest vs if you just bought in Jan 2023?
justsomeguy2018
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by justsomeguy2018 »

Question: can I "gift" $10k to my underage child?

How does that work exactly?
yobery
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by yobery »

Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
dalbright
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by dalbright »

justsomeguy2018 wrote: Mon Mar 28, 2022 3:05 pm
dalbright wrote: Mon Mar 28, 2022 5:35 am Thank you for those posting in this thread and the OP. The prior links were helpful as well. I just went through the gift process this morning as I had set money set aside for the next two years for I or EE bond purchases (depending on rates for the year) for my spouse and I. I will confirm tomorrow when everything processes but this is far better than the .5% ally was giving. Perfect timing considering this is the end of the month as well! This is my preferred "floor" for our retirement as its easily changeable after the hold periods
So is the main benefit to the gifting that you're accumulating additional high interest vs if you just bought in Jan 2023?
Yes, that is my view. You get 1-2 years (or however much you personally buy) of additional interest taking place in the "gift" section of each account (inflation rate vs .5% rate in savings account), Or, you are getting ahead on the 20 year clock for EE bonds. I had anticipated 1-2 more years of EE or I bond purchases as these make up a large component of my safety net/second tier emergency fund. I prefer these over bond funds or buying treasuries on the secondary market as I'm less likely to tinker and don't see red/green in the account...
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9-5 Suited
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by 9-5 Suited »

Feels like a circumvention of the spirit of the rules, so I think the above board thing to do is reach out to Treasury Direct and get confirmation they approve of this approach (if you haven’t already done so). Similar to how guidance has been issued previously that the IRS has no beef with backdoor Roth IRAs.
dalbright
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by dalbright »

yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I can confirm once it processes tomorrow but there is a pdf sheet on buying gift ee/I bonds on the treasury website which i followed and would be simpler than typing out the steps. If you go on treasury direct and click on the planning and giving tab there is a Savings Bonds As Gifts link. You can watch a video there or read the short "step by step tip sheet" pdf on the topic. Be sure to click the this is a gift box. Each bond is limited to 10000 so I believe you would have to repeat for any purchases beyond that amount. In the subsequent year(s) you just gift it to the person within the allowable amount for that year. I can't speak to that process until next year but it seems simple.
Tesla

Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by Tesla »

yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
yobery
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by yobery »

Tesla wrote: Mon Mar 28, 2022 4:07 pm
yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
Thank you, just what I needed! After the purchase did it then show up in your "gift box" immediately (good,what.I.want), or did it go right to your spouse's account immediately (bad, not.what.I.want)?
Tesla

Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by Tesla »

yobery wrote: Mon Mar 28, 2022 4:16 pm
Tesla wrote: Mon Mar 28, 2022 4:07 pm
yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
Thank you, just what I needed! After the purchase did it then show up in your "gift box" immediately (good,what.I.want), or did it go right to your spouse's account immediately (bad, not.what.I.want)?
Hopefully someone else can chime in here. My bonds are setup to purchase on Wednesday. My guess is they only show up in the purchased account until they are delivered to the recipient.
yobery
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by yobery »

Tesla wrote: Mon Mar 28, 2022 6:43 pm
yobery wrote: Mon Mar 28, 2022 4:16 pm
Tesla wrote: Mon Mar 28, 2022 4:07 pm
yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
Thank you, just what I needed! After the purchase did it then show up in your "gift box" immediately (good,what.I.want), or did it go right to your spouse's account immediately (bad, not.what.I.want)?
Hopefully someone else can chime in here. My bonds are setup to purchase on Wednesday. My guess is they only show up in the purchased account until they are delivered to the recipient.
I will answer my own question - as soon as the ACH is processed a gift will show up in the Gift Box for delivery later, and a personal purchase will show up in the Current Holdings :sharebeer
HomeStretch
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by HomeStretch »

Tesla wrote:
yobery wrote: Mon Mar 28, 2022 4:16 pm
Tesla wrote: Mon Mar 28, 2022 4:07 pm
yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
Thank you, just what I needed! After the purchase did it then show up in your "gift box" immediately (good,what.I.want), or did it go right to your spouse's account immediately (bad, not.what.I.want)?
Hopefully someone else can chime in here. My bonds are setup to purchase on Wednesday. My guess is they only show up in the purchased account until they are delivered to the recipient.
Yes, the gifted bonds show up in the purchaser’s TD account. The purchaser controls when the gift is delivered to the recipient’s TD account.

When setting up the gift registration (step 4 in Tesla’s prior post), depending on your estate planning you may want to add a beneficiary (such as yourself) to the gift registration.
CletusCaddy
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by CletusCaddy »

nydoc wrote: Sat Dec 11, 2021 3:16 pm 7% rate is valid for the next 5 months. Then it will reset to a lower rate. Base rate may rise in future years and inflation may also be around 3-4% so combined rate will not be that much different from current rates. Therefore buying so much I bonds upfront may not be such a lucrative idea.
Turns out it reset to a higher rate!
fundseeker
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by fundseeker »

dalbright wrote: Mon Mar 28, 2022 3:47 pm
justsomeguy2018 wrote: Mon Mar 28, 2022 3:05 pm
dalbright wrote: Mon Mar 28, 2022 5:35 am Thank you for those posting in this thread and the OP. The prior links were helpful as well. I just went through the gift process this morning as I had set money set aside for the next two years for I or EE bond purchases (depending on rates for the year) for my spouse and I. I will confirm tomorrow when everything processes but this is far better than the .5% ally was giving. Perfect timing considering this is the end of the month as well! This is my preferred "floor" for our retirement as its easily changeable after the hold periods
So is the main benefit to the gifting that you're accumulating additional high interest vs if you just bought in Jan 2023?
Yes, that is my view. You get 1-2 years (or however much you personally buy) of additional interest taking place in the "gift" section of each account (inflation rate vs .5% rate in savings account), Or, you are getting ahead on the 20 year clock for EE bonds. I had anticipated 1-2 more years of EE or I bond purchases as these make up a large component of my safety net/second tier emergency fund. I prefer these over bond funds or buying treasuries on the secondary market as I'm less likely to tinker and don't see red/green in the account...
Gifting sounds like a good plan, but can anyone confirm that interest does accrue immediately on bonds in the gift box? I want to believe it’s true, but having confirmation in writing from TD or from someone’s real experience would really help. So, is there any proof out there? Thanks!
dalbright
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by dalbright »

I can let you know in 4 months regarding the interest for mine due to the 3mo "penalty" at the start. I believe someone posted that you see it appear in the gift box just like a normal bond in treasury direct in regards to interest accrued.
Mathcop
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by Mathcop »

A very minor risk with this strategy that I have not seen mentioned: It is possible that in the future, the Treasury could reduce the annual purchase/gift limit. There is precedent - the annual limit was as high as $30,000 from 2003 to 2007 before it was dropped down to the current $10,000. If this were to happen, funds could be tied up waiting to be delivered as gifts for much longer than anticipated.

Not sure what would happen if the Treasury stopped issuing savings bonds entirely, effectively setting the annual purchase (and gifting?) limit to $0.
Just remember that the last laugh is on you ... and always look on the bright side of life! - Eric Idle
MikeG62
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I-Bond Gifting - Frontloading (pre-purchasing) for 2023 NOW

Post by MikeG62 »

[Thread merged into here --admin LadyGeek]

Harry did a great job of laying out this strategy in this article:

Buy I Bonds as a Gift: What Works and What Doesn’t
https://thefinancebuff.com/buy-i-bonds-as-gift.html

See the section under "Pre-Purchase/Frontload":

"You can buy a gift for your spouse and hold it in your gift box. Have your spouse do the same for you. Wait until interest rates drop and the two of you don’t buy I Bonds anymore. Then you can deliver the gift to each other. The older gift bonds earned the high interest rates in the years past and they have aged enough for immediate cashout.

We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.
"

This all makes sense to me. Having said that, there is a lot of back and forth in the comments section where people disagree as to whether this will work.

Have others done this before? I am interested in the views of others here.

For full disclosure, my wife and I purchased $10,000 in I-Bonds last week. I am thinking of buying $10,000 as a gift for her this week (and she do the same for me) with the intent of delivering those securities from the gift box in 2023. The reason for doing this now, frontloads our 2023 purchase at a time when we can earn ~8.50% on it for the next 12 months. Seems like a no-brainer for anyone sitting on excess cash.
Last edited by MikeG62 on Tue Apr 19, 2022 4:30 pm, edited 1 time in total.
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RubyTuesday
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by RubyTuesday »

MikeG62 wrote: Tue Apr 19, 2022 10:28 am Harry did a great job of laying out this strategy in this article:

Buy I Bonds as a Gift: What Works and What Doesn’t
https://thefinancebuff.com/buy-i-bonds-as-gift.html

See the section under "Pre-Purchase/Frontload":

"You can buy a gift for your spouse and hold it in your gift box. Have your spouse do the same for you. Wait until interest rates drop and the two of you don’t buy I Bonds anymore. Then you can deliver the gift to each other. The older gift bonds earned the high interest rates in the years past and they have aged enough for immediate cashout.

We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.
"

This all makes sense to me. Having said that, there is a lot of back and forth in the comments section where people disagree as to whether this will work.

Have others done this before? I am interested in the views of others here.

For full disclosure, my wife and I purchased $10,000 in I-Bonds last week. I am thinking of buying $10,000 as a gift for her this week (and she do the same for me) with the intent of delivering those securities from the gift box in 2023. The reason for doing this now, frontloads our 2023 purchase at a time when we can earn ~8.50% on it for the next 12 months. Seems like a no-brainer for anyone sitting on excess cash.
Many here have done this, including me this morning.

I’ve also bought gifts for DW over several years and then delivered them all in same year (I didn’t know at the time that the limit was based delivery, not purchase).
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
Tom_T
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by Tom_T »

MikeG62 wrote: Tue Apr 19, 2022 10:28 am We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.
There's nothing wrong with this because the gifts in your gift box don't have delivery dates attached to them. They can sit there for multiple years if you want.
ivgrivchuck
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by ivgrivchuck »

MikeG62 wrote: Tue Apr 19, 2022 10:28 am Have others done this before? I am interested in the views of others here.
Yes, I front-loaded for six years.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% I/EE-bonds
ModifiedDuration
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by ModifiedDuration »

MikeG62 wrote: Tue Apr 19, 2022 10:28 am We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.[/i]"
Perhaps a better strategy is if rates are still high next year you make delivery of the iBonds in the gift box and buy additional bonds as gifts.

The reason is this frees up liquidity.

The bonds you purchased in a prior year and you just delivered will be redeemable immediately or in a few months.

However, if you leave those previously gifted iBonds undelivered and go out and just have the recipient purchase new bonds, the newly purchased bonds will have a one-year lockout and the bonds you previously purchased will still be locked out.
cheapsaver
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by cheapsaver »

If as a couple, you have elected to report interest every year rather than at redemption, would that affect you front loading gifts to each other or gifts from other family members?

Interest is earned while sitting in the gift box before delivery. Does the recipient report the accrued interest while it's in the gift box? If not, then once gifted, do you report all the accrued interest in the year of delivery?
MikeG62
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by MikeG62 »

ModifiedDuration wrote: Tue Apr 19, 2022 12:33 pm
MikeG62 wrote: Tue Apr 19, 2022 10:28 am We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.[/i]"
Perhaps a better strategy is if rates are still high next year you make delivery of the iBonds in the gift box and buy additional bonds as gifts.

The reason is this frees up liquidity.

The bonds you purchased in a prior year and you just delivered will be redeemable immediately or in a few months.

However, if you leave those previously gifted iBonds undelivered and go out and just have the recipient purchase new bonds, the newly purchased bonds will have a one-year lockout and the bonds you previously purchased will still be locked out.
Good point.
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MikeG62
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by MikeG62 »

Tom_T wrote: Tue Apr 19, 2022 12:17 pm
MikeG62 wrote: Tue Apr 19, 2022 10:28 am We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.
There's nothing wrong with this because the gifts in your gift box don't have delivery dates attached to them. They can sit there for multiple years if you want.
Did you read the back and forth in the comments to TFB’s article?
Real Knowledge Comes Only From Experience
bpg1234
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by bpg1234 »

RubyTuesday wrote: Tue Apr 19, 2022 10:32 am Many here have done this, including me this morning.

I’ve also bought gifts for DW over several years and then delivered them all in same year (I didn’t know at the time that the limit was based delivery, not purchase).
So what happened in this particular case with TD when you delivered them all in the same year?
bpg
Tom_T
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by Tom_T »

MikeG62 wrote: Tue Apr 19, 2022 1:27 pm
Tom_T wrote: Tue Apr 19, 2022 12:17 pm
MikeG62 wrote: Tue Apr 19, 2022 10:28 am We’re buying each other a gift this year to keep undelivered in the gift box in addition to our normal purchases. If the interest rate is still good next year, we’ll buy normally and keep the gift in the gift box. If the interest rate isn’t good anymore, we’ll skip the purchase, deliver the gift, and cash out immediately.
There's nothing wrong with this because the gifts in your gift box don't have delivery dates attached to them. They can sit there for multiple years if you want.
Did you read the back and forth in the comments to TFB’s article?
Hmm, I had not, but I have now. Had no idea there was such controversy. My take was that the person who quoted the IRS regulations is correct, since I would trust the regulation over any unclear language on the TD site or by a TD representative.
§ 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.
I guess I'll just have to see what happens between now and next year.
RubyTuesday
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by RubyTuesday »

bpg1234 wrote: Tue Apr 19, 2022 1:37 pm
RubyTuesday wrote: Tue Apr 19, 2022 10:32 am Many here have done this, including me this morning.

I’ve also bought gifts for DW over several years and then delivered them all in same year (I didn’t know at the time that the limit was based delivery, not purchase).
So what happened in this particular case with TD when you delivered them all in the same year?
bpg
Nothing happened at all. No nastigrams or warnings or anything. For years I thought what I had done was correct, as I only purchased 10k per year as gifts for DW and then after she opened a TD account several years later, I delivered them all.

Perhaps TD saw that I didn’t violate the spirit of the limit? I wouldn’t intentionally go over the limit again.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
bpg1234
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by bpg1234 »

RubyTuesday wrote: Tue Apr 19, 2022 2:14 pm
bpg1234 wrote: Tue Apr 19, 2022 1:37 pm
RubyTuesday wrote: Tue Apr 19, 2022 10:32 am Many here have done this, including me this morning.

I’ve also bought gifts for DW over several years and then delivered them all in same year (I didn’t know at the time that the limit was based delivery, not purchase).
So what happened in this particular case with TD when you delivered them all in the same year?
bpg
Nothing happened at all. No nastigrams or warnings or anything. For years I thought what I had done was correct, as I only purchased 10k per year as gifts for DW and then after she opened a TD account several years later, I delivered them all.

Perhaps TD saw that I didn’t violate the spirit of the limit? I wouldn’t intentionally go over the limit again.
Interesting if perhaps at the time wasn't a concern but could be today with so much "interest" in iBonds. So from what I've read throughout this and other posts there should be no problem with buying 3 separate $10K iBonds for DW ($30K) scheduled for the same day before the end of this month and keep them in my gift box for subsequent delivery of $10K to her over the next 3 calendar years and for her do the same for me? Additionally, since we're married there are no gift tax implications to deal with, etc. This is correct?
Thanks in advance,
bpg
ModifiedDuration
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by ModifiedDuration »

bpg1234 wrote: Tue Apr 19, 2022 2:47 pm Interesting if perhaps at the time wasn't a concern but could be today with so much "interest" in iBonds. So from what I've read throughout this and other posts there should be no problem with buying 3 separate $10K iBonds for DW ($30K) scheduled for the same day before the end of this month and keep them in my gift box for subsequent delivery of $10K to her over the next 3 calendar years and for her do the same for me? Additionally, since we're married there are no gift tax implications to deal with, etc. This is correct?
Thanks in advance,
bpg
Yes, you are correct.

Just to be sure: each of you have already purchased outright $10k for yourselves this year, correct?
dboeger1
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by dboeger1 »

Not to hijack this thread, but I made a silly mistake based on a guide someone posted that I think is easy to make, so I'd like to point it out to others. When buying gift I-bonds for a spouse, it's probably best to select a "beneficiary" registration. If you do it correctly, TD will label it something like "<owner> POD <beneficiary>". The guide I followed said to choose "sole owner", which I thought made logical sense for a gift purchase.

My understanding is that "primary/secondary ownership" is really just beneficiary + transactional rights, but I'd probably avoid it just to be safe, since I don't know if secondary ownership counts against the secondary owner's annual purchase/delivery limit.

The good news is that the owner can modify the registration to add a beneficiary or second owner once it's delivered. The bad news is that if put your spouse as the sole owner on a gift purchase, it can't be modified until delivery, so if they were to pass away before delivery, it would have to go through the normal estate process and potentially probate if a plan wasn't in place.

I bought $20k of I-bonds for us last year, and then another $60k this year. I didn't originally plan to use the gift trick, but the current deal just seems too good to pass up, and they fit my greater portfolio structure quite well at this point in time.
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neurosphere
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by neurosphere »

dboeger1 wrote: Tue Apr 19, 2022 3:12 pm Not to hijack this thread, but I made a silly mistake based on a guide someone posted that I think is easy to make, so I'd like to point it out to others. When buying gift I-bonds for a spouse, it's probably best to select a "beneficiary" registration. If you do it correctly, TD will label it something like "<owner> POD <beneficiary>".
Do you mean, make yourself the beneficiary? That is, spouse 1 buys a gift for spouse 2 with the registration: Spouse 2 POD Spouse 1?
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by MikeG62 »

dboeger1 wrote: Tue Apr 19, 2022 3:12 pm Not to hijack this thread, but I made a silly mistake based on a guide someone posted that I think is easy to make, so I'd like to point it out to others. When buying gift I-bonds for a spouse, it's probably best to select a "beneficiary" registration. If you do it correctly, TD will label it something like "<owner> POD <beneficiary>".
Yes this make sense.
dboeger1 wrote: Tue Apr 19, 2022 3:12 pm My understanding is that "primary/secondary ownership" is really just beneficiary + transactional rights, but I'd probably avoid it just to be safe, since I don't know if secondary ownership counts against the secondary owner's annual purchase/delivery limit.
According to The Finance Buff's article, "You can include a second owner or a beneficiary for the I Bonds you buy as a gift. If the designated recipient dies before you deliver the gift, the designated second owner or beneficiary will inherit your gift. You can’t designate yourself as the second owner of the gift but you can designate yourself as the beneficiary of the gift. The recipient can change the second owner or the beneficiary after you deliver the gift."
dboeger1 wrote: Tue Apr 19, 2022 3:12 pm
The good news is that the owner can modify the registration to add a beneficiary or second owner once it's delivered. The bad news is that if put your spouse as the sole owner on a gift purchase, it can't be modified until delivery, so if they were to pass away before delivery, it would have to go through the normal estate process and potentially probate if a plan wasn't in place.
Good to know. So set it up with the beneficiary from the onset.
dboeger1 wrote: Tue Apr 19, 2022 3:12 pm
I bought $20k of I-bonds for us last year, and then another $60k this year. I didn't originally plan to use the gift trick, but the current deal just seems too good to pass up, and they fit my greater portfolio structure quite well at this point in time.
How did you squeeze in $60K this year? Assume you did $20,000 straight up ($10,000 for you and $10,000 for your spouse) and then you did two $10,000 gifts for your spouse (one to deliver in 2023 and one to deliver in 2024) and your spouse did two similar $10,000 gifts for you.
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by HueyLD »

neurosphere wrote: Tue Apr 19, 2022 3:23 pm
dboeger1 wrote: Tue Apr 19, 2022 3:12 pm Not to hijack this thread, but I made a silly mistake based on a guide someone posted that I think is easy to make, so I'd like to point it out to others. When buying gift I-bonds for a spouse, it's probably best to select a "beneficiary" registration. If you do it correctly, TD will label it something like "<owner> POD <beneficiary>".
Do you mean, make yourself the beneficiary? That is, spouse 1 buys a gift for spouse 2 with the registration: Spouse 2 POD Spouse 1?
Yes.

You cannot be the secondary owner of a gift bond. But you can be the beneficiary when you buy a gift bond for another person.
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by bpg1234 »

ModifiedDuration wrote: Tue Apr 19, 2022 2:51 pm
bpg1234 wrote: Tue Apr 19, 2022 2:47 pm Interesting if perhaps at the time wasn't a concern but could be today with so much "interest" in iBonds. So from what I've read throughout this and other posts there should be no problem with buying 3 separate $10K iBonds for DW ($30K) scheduled for the same day before the end of this month and keep them in my gift box for subsequent delivery of $10K to her over the next 3 calendar years and for her do the same for me? Additionally, since we're married there are no gift tax implications to deal with, etc. This is correct?
Thanks in advance,
bpg
Yes, you are correct.

Just to be sure: each of you have already purchased outright $10k for yourselves this year, correct?
Thanks for confirmation. Yes I purchased our respective 2022 $10K iBonds at the end of January.
bpg
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Re: I-Bond Gifting - Frontloading (pre-purchasing) for 2023 now

Post by dboeger1 »

MikeG62 wrote: Tue Apr 19, 2022 3:28 pm
dboeger1 wrote: Tue Apr 19, 2022 3:12 pm I bought $20k of I-bonds for us last year, and then another $60k this year. I didn't originally plan to use the gift trick, but the current deal just seems too good to pass up, and they fit my greater portfolio structure quite well at this point in time.
How did you squeeze in $60K this year? Assume you did $20,000 straight up ($10,000 for you and $10,000 for your spouse) and then you did two $10,000 gifts for your spouse (one to deliver in 2023 and one to deliver in 2024) and your spouse did two similar $10,000 gifts for you.
Correct, $10k each normal purchase, and $20k gift each. The gift purchases were made in $10k increments, mostly because I wasn't entirely sure we would buy the last $20k until I made the decision. Just make sure you're aware of the gift tax exclusion as it pertains to your situation. It's pretty generous in most situations, but it's still worth double-checking.
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by LadyGeek »

I merged MikeG62's thread into the ongoing discussion. The combined thread is now in the Investing - Theory, News & General forum (general discussion).

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by MikeG62 »

LadyGeek wrote: Tue Apr 19, 2022 7:33 pm I merged MikeG62's thread into the ongoing discussion. The combined thread is now in the Investing - Theory, News & General forum (general discussion).

(Thanks to the member who reported the post and provided a link to this thread.)
Apologies, did not see a similar thread on this topic before posting my question. Thanks for merging them. Thanks also to all who responded.

We are moving forward with the $10,000 I bond purchases for our gift boxes today. Plan to deliver those gifts in 2023 (having them count toward our 2023 purchase limit) unless rates remain really compelling versus the alternatives, in which case we will leave them in our gift boxes (for 2024 delivery) and instead make new 2023 purchases.

After re-reading this thread in its entirety, I am thinking of pre-purchasing (front loading) our 2024 allotment this month as well. Looking at it this way.

Let's say the composite rate on I Bonds resets to 0% on Nov 1, 2022. This rate would be applied to our current purchases beginning April 1, 2023. We would have still locked in the 7.12% annualized rate for the six month period from 4/1/22 to 9/30/22 ($356 in interest) and then 9.60% annualized rate for the six month period 10/1/22 to 3/31/23 ($497 in interest). If the rate remains at 0% for the rest of 2023, we deliver the $10,000 in gifts to each other in January of 2024 and cash them out. Would have earned total interest of $853 for ~20 months, which is a return of ~5.0% annualized.

Compare this to someone buying say two-year treasuries today and locking in ~2.50% annualized (or a 20 month treasury in the open market with a yield somewhat below 2.50%). How does the purchase of a two-year treasury make sense (assuming one could lock up the $20,000 for 20 months with certainty) given the 5.0% worst case guaranteed rate in my I bond example above?

Only downside I see to this is that sometime in 2023 (after April 1) rates on other fixed income become really attractive (despite I bonds yielding nothing) and I lose out on the opportunity to take advantage of that higher interest rate elsewhere for 8 months (or some fewer number of months) because my funds are locked up till 1/1/24. Of course that would mean the $20,000 I intend to use for the 2024 gift is invested elsewhere now earning current interest rates, which are awful (like the 60bps I am getting at Marcus bank).
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by GuyInFL »

Tesla wrote: Mon Mar 28, 2022 4:07 pm
yobery wrote: Mon Mar 28, 2022 3:08 pm Re: purchasing an additional $10k ibond for spouse (for 2023's limit)... could anyone who's done this describe what needs to be done exactly, as compared to buying a regular ibond (for 2022's limit)? Don't want to mess it up. Thank you!
I just did this yesterday. Here’s what I did.
1. Click on “Buy Direct” tab
2. Click “Series I” radio button
3. Submit
4. “Add New Registration”
- Sole Owner - Enter Spouse Info
- This is a gift
- Submit
5. Proceed to purchase with the newly added registration.
I selected Beneficiary instead of Sole Owner and was able to enter my wife as the gift recipient and me as the beneficiary.

Don’t forget the snazzy gift certificate!

https://www.treasurydirect.gov/indiv/pl ... icates.htm
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by SnowBog »

As a reminder PSA:
  • Don't forget to use the "gift" registration for frontloading
  • Buy early if you want to secure the current 7.12% rate
I made the mistake of buying 1 side of the "gift" as a regular purchase, resulting in the note saying its over the annual limit and will be refunded in the next 8 weeks! :oops: (Completely my fault, I can see I selected the wrong registration...)

Luckily I have another $10k I can move around to replace the "gift" I screwed up, but that will take 2-3 days to settle before it's available to make the order.

Had I waited until the end of the month, I'd be out of luck.
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IBOND Gift to spouse for frontloading

Post by faltuk1 »

[Thread merged into here --admin LadyGeek]

Should I put myself as secondary owner? The registration allows it. Read some posts that for gifts, I should not put myself as secondary owner and use beneficiary option. Any Consensus here?
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Re: IBOND Gift to spouse for frontloading

Post by faltuk1 »

I had read these articles. One of these article says "You can’t name yourself as the second owner of the gift but you can name yourself as the beneficiary of the gift."

But as I said, the registration allows to set me as secondary owner of a gift. Wondering why are so many articles/post are saying to use beneficiary registration. Secondary owner doesn't seem to have any effect on $10000/year limit, so don't understand the reasoning.
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Re: IBOND Gift to spouse for frontloading

Post by Tom_T »

faltuk1 wrote: Mon Apr 25, 2022 8:37 am I had read these articles. One of these article says "You can’t name yourself as the second owner of the gift but you can name yourself as the beneficiary of the gift."

But as I said, the registration allows to set me as secondary owner of a gift. Wondering why are so many articles/post are saying to use beneficiary registration. Secondary owner doesn't seem to have any effect on $10000/year limit, so don't understand the reasoning.
Does it? When I made a gift, I wasn't able to set a second owner. It was disabled. Just in case, make sure you've checked the "this is a gift" button. Let us know, I am curious.

No matter what, once the bond is delivered, the spouse can add you as a secondary owner even if you were originally beneficiary-only (or not mentioned at all.)
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Re: IBOND Gift to spouse for frontloading

Post by graspau »

I tried this just a few weeks ago and an error popped up saying i could not be the recipient of my own gift....i could only do a registration that had my wife as owner and me as payable on death...I can't imagine they changed it to allow people to gift to themselves. *** As noted above are you sure the registration you selected has the This is a Gift box checked? if not, you may go over the limit when you do it.
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by LadyGeek »

I merged faltuk1's thread into the ongoing discussion.

(Thanks to the member who reported the post and explained what's wrong.)
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by faltuk1 »

That clears up. Error popped up after I clicked submit. Thanks!
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by Tom_T »

faltuk1 wrote: Mon Apr 25, 2022 8:53 am That clears up. Error popped up after I clicked submit. Thanks!
The TD site has several ways to make mistakes. It's definitely clunky, but it works if you do everything right and never, ever hit the "back" button on your browser.
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by SnowBog »

SnowBog wrote: Sat Apr 23, 2022 12:29 am As a reminder PSA:
  • Don't forget to use the "gift" registration for frontloading
  • Buy early if you want to secure the current 7.12% rate
I made the mistake of buying 1 side of the "gift" as a regular purchase, resulting in the note saying its over the annual limit and will be refunded in the next 8 weeks! :oops: (Completely my fault, I can see I selected the wrong registration...)

Luckily I have another $10k I can move around to replace the "gift" I screwed up, but that will take 2-3 days to settle before it's available to make the order.

Had I waited until the end of the month, I'd be out of luck.
And a "Murphy's Law" update...

Sure enough, my $10k I moved around to replace the screwed up "gift" (that apparently won't be refunded for weeks) didn't clear in time (that's my banks fault...)

So now I have a "mystery" gift bond showing in the TD account - but which I believe will soon disappear (since the bank rejected the transaction).

Since I attempted to do this today - I have one final shot at things tomorrow... Hopefully the funds will have cleared by then.
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Re: An Easy Way to Frontload (temporarily exceed) I/EE Bond Annual Limit?

Post by YoungSisyphus »

I’m behind on this - if we do this in May what are we losing? The ~7% interest that would instead be 9% + a future unknown rate? Is there a good due date to do this by in May?
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Re: "Gifting" Oneself to Frontload I/EE Bond Annual Limit?

Post by Cheez-It Guy »

ivgrivchuck wrote: Wed Jan 12, 2022 2:07 pm
Average Investor wrote: Wed Jan 12, 2022 1:43 pm
BrokerageZelda wrote: Wed Jan 12, 2022 10:10 am
TD will not let you gift to yourself. TD will not even let you put yourself as POD on a gift bond with someone else as primary.

Ask me how I know. 😢 (They can always edit the POD in their own account after they take possession.)
For what it’s worth, my mother was able to gift an I bond registered to my father POD my mother.
Same here.

I was able to gift a bond to my spouse POD me.
Is the registration in the spouse's name plus POD done at time of purchase, or time of gifting / transfer? Once the gift bond has been transferred, are there still restrictions on modifying the registration, or is it the same as if your spouse had purchased the bond themselves initially? That is, AFTER transfer, can your spouse add you as a second direct owner and assign transact rights, or does registration remain restricted with POD the best you can do? Thanks!
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Re: "Gifting" Oneself to Frontload I/EE Bond Annual Limit?

Post by Richard1580 »

Cheez-It Guy wrote: Sat Apr 30, 2022 8:00 am That is, AFTER transfer, can your spouse add you as a second direct owner and assign transact rights, or does registration remain restricted with POD the best you can do? Thanks!
At the time you purchase the gift, you will want to name yourself as the POD.
After the transfer, the owner can add you as a secondary owner and grant you transaction rights.

More information here:
https://thefinancebuff.com/i-bonds-bene ... irect.html
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