How to Redeem US Savings Bonds
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There are a few things you should know before redeeming US savings bonds.
Step 1
As to the redemption limits of US savings bond - For those who invest in savings bonds, be aware that there are restrictions on the redemption of the bonds. According to the US Treasury Department, except for major calamities and natural disasters, the US savings bonds cannot be redeemed within six months or one year from the time of the original date of issue of the bonds. Likewise, there is a three-month interest penalty if redemption is made before the lapse of five years which means that you would lose an equivalent to three months interest.
Step 2
As to the redemption fee - For US savings bonds, there are no fees or charges for their purchase and redemption. Likewise, before the redemption of the bond, the federal income tax can be deferred on savings bonds and the savings bonds interest is exempt from state and local income taxes as well as from federal income tax if you have higher education expenses.
Step3
Change of registration, effect of death on redemption - If the registered owner of the savings bond dies, the surviving registrant has the option to cash in the bond or to change the registration of the bond. A co-owner or surviving registrant can redeem the bond upon presentation of proper identification papers. A beneficiary or one who appears to be payable on death must present the owner of the bond’s death certificate.
Step 4
Ordinary redemptions and redemption of more than 100 savings bonds - For ordinary redemptions of savings bonds, there are no forms required but you have to ask your local bank to certify your signatures on the back of the savings bonds. If the bank is reluctant to certify your signature, explain to the bank that their signature is a necessary procedure and you do not ask the bank to redeem the bonds but you will personally send the bonds to the Federal Reserve for redemption. Present all identifications necessary for the bank to be able to guarantee the authenticity of your signatures and your capacity to sign on the bonds.
If you want to redeem more than 100 savings bonds, there is a procedure that avoids the hassle of having to sign on each and every bond. One can simply request for the Public Debt Form 1522 and list all the bonds in the form, then sign the form and have the bank certify your signature on the form. Just make sure that all the bonds no longer earn interest otherwise you might pay more income tax.
Step 5
Electronic redemption of savings bonds - Electronic redemption and even partial redemption of savings bonds is allowed. The only requirement is that redemption must not be less than 25 US dollars and that there must be a remaining balance of 25 US dollars for the issue month you are cashing in. Electronic redemption is allowed for both the Series I and the Series EE savings bonds.
Related Posts
- How to Redeem EE bonds
- EE Series Bond Interest Earnings and Taxes
- Buying EE Series Bonds
- EE Government Savings Bonds 101
- How to Buy US Savings Bonds
- EE Series Bonds Rates and Terms
- Using EE Series Bonds for Education
