Can I convert EE Savings Bonds into I Bonds? (2024)

FAQs

Can I convert EE Savings Bonds into I Bonds? ›

Therefore, when you cash in your series EE bonds, you can simply use the proceeds to purchase I Bonds, he said. When you cash in your EE bonds, you will pay federal but not state income taxes on the interest portion of the redemption, he said.

You may convert Series EE and I Savings Bonds registered in your name alone, and in your name with a co-owner or beneficiary (POD). With a few exceptions, you'll have the same flexibility with converted bonds as you have with securities bought in TreasuryDirect.

There should be a signature page you need to sign, but again do not sign the back of your bond(s). Mail the document along with the unsigned bond(s) to the Treasury Department at the address below and wait for three-to-four weeks for the conversion to take place.

I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.

Use the Education Exclusion

You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent.

As of July 2024, there were 96 million matured unredeemed savings bonds held by investors. If bonds are held past their maturity date, the bonds can lose value due to inflation. To understand how this value is lost, see the illustration below. Imagine you bought a series EE bond 30 years ago for $500.

How long should I wait to cash in a savings bond? It's a good idea to hang on to your bond for as long as possible, ideally until it matures, so you can take full advantage of compound and accrued interest.

EE bonds you buy now have a fixed interest rate that you know when you buy the bond. That rate remains the same for at least the first 20 years. It may change after that for the last 10 of its 30 years. We guarantee that the value of your new EE bond at 20 years will be double what you paid for it.

Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.

What is the downside to I bonds? ›

Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest. Only taxable accounts are allowed to invest in I bonds (i.e., no IRAs or 401(k) plans).

September 2024 I Bond Fixed Rate is 1.30%!

If you liked having I Bonds and matching inflation then you might love having I Bonds that beat inflation over the next 30 years. The current fixed rate of 1.30% is one of the best fixed rates in the past 21 years.

In any one calendar year, you may buy up to $10,000 in Series EE electronic savings bonds AND up to $10,000 in Series I electronic savings bonds for yourself as owner of the bonds. That is in addition to the amount you can spend on buying savings bonds for a child or as gifts.

I cashed some Series E, Series EE, and Series I savings bonds. How do I report the interest? In general, you must report the interest in income in the taxable year in which you redeemed the bonds to the extent you did not include the interest in income in a prior taxable year.

Banks and credit unions can redeem savings bonds over the counter.

Interest from EE U.S. savings bonds is taxed at the federal level but not at the state or local levels for income.

With a Series EE bond, you wait to get all the money until you cash in the bond. Electronic EE bonds: We pay automatically when the bond matures (if you haven't cashed it before then). Paper EE bonds: You must submit the paper bond to cash it. See Cash in (redeem) an EE or I savings bond.

In any one calendar year, you may buy up to $10,000 in Series EE electronic savings bonds AND up to $10,000 in Series I electronic savings bonds for yourself as owner of the bonds. That is in addition to the amount you can spend on buying savings bonds for a child or as gifts.

How do I cash my electronic bonds? Go to your TreasuryDirect account. Go to ManageDirect. Use the link for cashing securities.

Gifting electronic EE or I savings bonds

TreasuryDirect is the official United States government application in which you can buy and keep savings bonds. You can gift a savings bond to adults or children.