I've been buying US Savings Bonds for the last 20+ years, I started while in the Army and haven't stopped since; it's just something I've always done out of habit. They're all sitting in a safe deposit box, and I'm a bit embarrassed to admit I don't know much about them. A few questions, if anyone knows the answers; 1) What is the maturation length for a series EE bond? 2) What is the tax penalty for cashing them in after maturation? 3) Can they be rolled over into an IRA or a child's college education fund with no penalty? 4) Can I use them to buy more bonds with no penalty? Any other information about them would be appreciated.
Anser to (3) is yes they can be used tax free to pay for your childs education at a college or university. See http://www.treasurydirect.gov/indiv/planning/plan_education.htm
Story about bonds Hi Bruce, This is off topic but I thought of interest. My grandmother purchased bonds for my brothers and I from the time we were born with her grocery savings and rebates. She was not a woman of means but left us all with several thousand dollars accumulated over 22 years. Hille
1. Currently, series EE bonds have an original maturity of 20 years. However, the EE bonds will continue to earn interest for another 10 years. http://www.treasurydirect.gov/news/pressroom/currenteebondratespr.htm 2 "Like all treasury securities, they are exempt from state and local taxes, but in the specific case of savings bonds, all federal taxes may be deferred until the bond is redeemed. Therefore, even though interest will accrue, no taxes will be due until that money can be accessed. Additionally, if the money received at redemption is used to pay tuition expenses for the holder, a spouse or a dependent in the same year, the interest earned may be exempt from federal taxes as well." http://www.investorguide.com/igu-article-577-bonds-savings-bonds.html - Morningstar.com has a number of self paced online courses available for free. Learn about bonds, stocks, mutual funds, and portfolio management. http://www.morningstar.com/Cover/Classroom.html - If you want to take it a step further, the options industry council offers free online courses about options. http://www.888options.com/default.jsp - If you want to venture the world of foreign exchange ( Forex ), babypips.com has nice tutorials about currency trading. - To learn the basics about futures, visit the website of the U.S. Commodity Futures Trading Commission. http://www.cftc.gov/educationcenter/futuresmarketbasics.html investing and trading... love it
Here is a clearer response to question number two: ""Savings bonds are exempt from state and local income taxes. But, savings bonds are subject to state and local estate taxes, inheritance, gift, and other excise taxes, whether Federal or State." http://www.treasurydirect.gov/indiv/planning/plan_tax.htm
Being 40+, I should probably look into cashing in the bonds which have matured, and stop buying new bonds. For the mature bonds, is there any tax penalty? If there is a penalty, can I avoid it by rolling them into an IRA or something similar?
There is no tax penalty if you cash in at maturity. However, your interest will be taxed at the federal level. You can avoid this by rolling over to a 529 plan. "Series EE and I US Savings Bonds issued after December 31, 1989 may be redeemed tax-free in order to contribute the proceeds to a section 529 plan or Coverdell Education Savings Account. (To take advantage of this, file IRS Form 8815 to claim an exclusion for the interest after rolling the proceeds of these US Savings Bonds into a section 529 college savings plan or Coverdell Education Savings account. Write "529 College Savings Plan" or "Coverdell Education Savings Account" in the answer to 1(b), where it asks for the name of the educational institution. The specific citation in the tax code for this guidance is IRC Section 135(c)((2)(C).) http://www.finaid.org/savings/529plans.phtml
According to Kiplinger's.com, you can also make a tax-free transfer to Education IRAs. These tax free transfers to IRAs and 529 plans apply to Series EE bonds purchased on or after January 1, 1990.
For educational purposes only You are welcomed kizmet. This post is in response to a spam post about a bank offering %3.50 APY. There are products that offer free stock trades per month, allowing people to save money on trading costs, and the possibility of making a higher return on their investment or day trade. There are no guarantees that you will make money and you can lose money as a result. Here are two examples of companies that offer free stock trades. Zecco.com offers 10 free stock trades per month. The minimum opening requirement is $2,500. One of my favorite products to day trade are ETFs. Bank of America offers a similar deal. However, they require that you hold a combined balance of $25,000. http://www.bankofamerica.com/investing/index.cfm?&statecheck=AZ "An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day" "An ETF combines the valuation feature of a mutual fund or unit investment trust, which can be purchased or redeemed at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be substantially more or less than its net asset value." http://en.wikipedia.org/wiki/Exchange-traded_fund http://www.etfconnect.com/ This is interesting for those looking to expand their domestic portfolio. Etrade offers the opportunity to trade stocks in Germany, France, Hong Kong, Canada, UK, Japan. https://us.etrade.com/e/t/investingandtrading/globaltrading Both zecco and etrade are members of SIPC and FINRA "FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. We oversee 4,991 brokerage firms, 173,962 branch offices and 676,632 registered securities representatives. " http://www.finra.org/index.htm "Why is the issue of SIPC membership relevant to you? SIPC protects customers of broker- dealers as long as the broker-dealer is a SIPC member. However, if a SIPC member's registration with the U.S. Securities and Exchange Commission is terminated, the broker-dealer's SIPC membership is also automatically terminated" http://www.sipc.org It may be a good idea to consult with a financial adviser before making decisions on where to plant your greens. - If you are not familiar with stocks, bonds, mutual funds, and money market accounts, stay away from forex, futures, and options. Great way to upset your loves ones and go broke.
Also, there is a website that you can enter the serial number of the bond and it will give you the current value. My wife got some bonds her grandmother purchased in early 70's. They all had a face value of $800 but a current value of just over $4K. Here is the link - http://www.treasurydirect.gov/BC/SBCPrice
Here's one. http://www.treasurydirect.gov/BC/SBCPrice http://www.ustreas.gov/education/faq/markets/redemption.html
