Are Your Savings Bonds Worth Anything?

U.S. savings bonds are a secure and accessible investment option, often received as gifts or purchased for long-term savings. These government-backed securities offer a safe way to grow money over time. Understanding their characteristics, how to ascertain their current worth, and the procedures for managing them is important for bondholders.

Types and Features of Savings Bonds

U.S. savings bonds come in various series, each with distinct features regarding interest accrual and maturity. Series EE bonds guarantee to double in value over a 20-year period and continue to earn a fixed interest rate for up to 30 years from their issue date. While historically sold at a discount, current electronic Series EE bonds are purchased at face value.

Series I bonds offer protection against inflation, featuring a composite interest rate that combines a fixed rate with a variable inflation rate, adjusted every six months. These bonds also earn interest for up to 30 years.

Older Series H and HH bonds, though no longer available for purchase, are still held by many investors. Unlike EE and I bonds, HH bonds paid fixed interest directly to the bondholder every six months and did not accrue interest. Most HH bonds matured after 20 years. Individuals can purchase Series EE and I bonds electronically through TreasuryDirect in denominations starting at $25, with an annual purchase limit of $10,000 per series.

Checking the Value of Your Savings Bonds

Determining the current value of your savings bonds primarily utilizes the TreasuryDirect website. For paper savings bonds, the TreasuryDirect Bond Value Calculator is the key tool. To use this calculator, input the bond’s series, denomination, and issue date, all printed on the bond itself. The series is typically in the upper right corner, the denomination in the upper left, and the issue date is clearly marked.

The calculator will then display the bond’s current worth, including the original purchase price and all accrued interest. For electronic savings bonds, their current value is accessible by logging into your TreasuryDirect account and navigating to the “Current Holdings” section. Bonds stop earning interest once they reach their final maturity date, typically 30 years for Series EE and I bonds and 20 years for Series HH bonds.

Redeeming Your Savings Bonds

The redemption process varies depending on whether you hold electronic or paper bonds. For electronic Series EE and I bonds held in a TreasuryDirect account, redemption is done online. After logging in, navigate to the “ManageDirect” section and select “Redeem securities.” You can redeem a minimum of $25, and partial redemptions are possible for electronic bonds, with funds typically deposited directly into your linked bank account within two business days.

If you possess paper savings bonds, you have a couple of options for redemption. Many financial institutions may cash paper bonds; it is advisable to call ahead to confirm their policy and requirements. You will need to present the bond along with government-issued identification.

Alternatively, you can redeem paper bonds by mail using FS Form 1522. This form requires details about the bonds, including names, serial numbers, and issue dates, along with your direct deposit information. For redemptions exceeding $1,000, signatures on FS Form 1522 must be certified by a notary public or an authorized certifying officer.

Unlike electronic bonds, paper bonds must be redeemed for their full value. A bond must be held for at least one year before it can be cashed, and redeeming it before five years results in a penalty of three months’ interest.

Tax Implications of Savings Bonds

Interest earned on U.S. savings bonds is subject to federal income tax but exempt from state and local income taxes. Bondholders have two options for reporting this interest: annually as it accrues (accrual method) or deferring taxation until the bond matures, is redeemed, or undergoes a reportable event (cash method). Most individuals opt for the cash method to defer taxation, meaning the entire accumulated interest is taxed in the year of redemption. Upon redemption, the interest is reported to the IRS on Form 1099-INT.

A tax advantage exists through the Education Savings Bond Program, allowing for the exclusion of interest from federal income tax under specific conditions. This exclusion applies to interest from Series EE and I bonds issued after 1989. To qualify, the bond owner must have been at least 24 years old when the bond was issued, and the bond must be registered in the owner’s name or jointly with a spouse, not in the name of a dependent. The proceeds, including interest, must be used for qualified higher education expenses for the bond owner, their spouse, or a dependent at an eligible educational institution. This exclusion is subject to Modified Adjusted Gross Income (MAGI) phase-out limits.

Handling Lost or Damaged Savings Bonds

If a paper savings bond is lost, stolen, or damaged, the U.S. Treasury provides a process for resolution. If uncertain about specific bonds, the Treasury Hunt tool can search for unclaimed matured savings bonds, particularly those issued after 1974. For confirmed lost, stolen, or destroyed bonds, submit FS Form 1048, the Claim for Lost, Stolen, or Destroyed United States Savings Bonds. This form requires detailed information about the missing bonds.

When paper Series EE or I bonds are reissued, they are converted into electronic form within a TreasuryDirect account. For electronic bonds, issues typically involve access. If you forget your password, reset it online through the TreasuryDirect website. If your account becomes locked due to multiple incorrect login attempts, contact TreasuryDirect customer service by phone for assistance. For certain account changes or identity verification, you may need to print, complete, and mail a specific form, like FS Form 5512, which often requires a certifying officer’s signature.