Savings bonds are a popular way to save money safely and earn some interest. They are issued by the federal government and are considered among the least risky bonds available to individuals.
What are savings bonds?
U.S. savings bonds are issued by the federal government. When you buy a savings bond, you are lending money to the government. In return, the government pays interest on the bond. When you redeem the bond, you will receive the full interest earned as well as the amount you loaned to the government.
How can I redeem paper savings bonds?
To redeem a paper bond, the easiest thing you can do is bring the bond to your local bank or credit union. You will need:
- The bond
- Proof of identity
- The owner’s death certificate if you are the specified beneficiary upon death
If you cannot redeem paper bonds at your local bank, you can mail them to the U.S. Department of the Treasury for redemption. Download FS Form 1522 and send it along with the bonds to the government. The government will directly deposit the amount into your bank account.
How can I redeem electronic savings bonds?
To redeem electronic savings bonds, you will need to log into your TreasuryDirect account. From there, select the “ManageDirect” menu and click on “Redeem securities.”
From this screen, you can select up to 50 bonds for redemption at one time. You then have two options: you can let the funds stay in your TreasuryDirect account until you are ready to use them to purchase additional bonds, or you can send them to your bank account.
If you choose to deposit the funds into your bank account, the amount should be credited within two business days of the redemption date.
What are the tax implications of redeeming bonds?
Redeeming bonds creates a tax obligation. The interest you earn is subject to federal taxes but is exempt from any state and local income taxes.
Savings bonds are also subject to federal, state, and local taxes on inheritance and gift taxes if you inherit the bond or receive it from someone else.
Frequently Asked Questions (FAQs)
How can I redeem a savings bond owned by a deceased person?
If the owner of a savings bond has passed away, the specified beneficiary upon death can redeem the bond using the regular redemption methods mentioned above. They may also request to have the bond reissued in their name.
If no beneficiary has been designated on the bond, and the bonds are valued at less than $100,000, and there are no probate proceedings related to the deceased’s estate, you may submit FS Form 5336 to redeem the bonds.
If there is a court involved or the value of the bonds exceeds $100,000, the Treasury has specific instructions based on your role in the inheritance.
How can I redeem a childhood savings bond after marriage?
If your name has changed due to marriage, you can redeem the savings bond as you normally would. If you are cashing a paper bond, you will need to sign using both your maiden name and your married name.
How can I redeem a damaged paper savings bond? What if I lost it?
If you have a savings bond that is damaged or lost, you can get your money back. You will need to fill out FS Form 1048, which requires the issue date, face amount, and the serial number of the lost or damaged bond. You will also need to provide additional information, such as how you lost or damaged the bond.
On the form, you can request that the amount be deposited into your bank account, or you can request that the Treasury issue a replacement bond for you.
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Source: https://www.thebalancemoney.com/how-do-i-redeem-my-savings-bonds-5185993
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