How to Cash Paper Bonds at a Bank or by Mail
Unlock the value of your paper savings bonds. This guide simplifies the steps for successful redemption, covering what you need and how to proceed.
Paper bonds, such as U.S. Treasury Savings Bonds in Series EE or I, are a tangible form of government-backed investment. Many households still hold these physical securities, often for decades. Converting them to cash requires understanding specific procedures and documentation. This guide explains how to redeem your physical savings bonds.
Understanding Your Paper Bond
Before redeeming, identify your bond’s characteristics. Savings bonds include Series EE and I, and older Series H or HH. The series type, printed on the bond, determines its features and how interest accrues. EE and I bonds gain value through accrued interest; H and HH bonds paid interest directly.
The ownership registration on the bond dictates who can legally redeem it. Bonds can be registered to a single owner, co-owners (with “or” between names), or with a beneficiary (“Payable on Death” or POD). Redemption is allowed by the owner or a co-owner listed on the bond.
Determine if your bond has reached maturity. Bonds must be held for at least one year from issue date. Redeeming before five years forfeits the last three months of interest. Series EE and I bonds earn interest for up to 30 years; Series H and HH bonds matured after 20 years, with all HH bonds ceasing interest by August 2024.
Required Items for Redemption
Gather necessary items before cashing your bond: a valid government-issued photo identification (e.g., driver’s license, passport) and the bond owner’s Social Security Number.
The original paper bond is required for redemption. If lost, stolen, or destroyed, complete FS Form 1048, “Claim for Lost, Stolen, or Destroyed United States Savings Bonds,” for replacement or payment. This form is on the TreasuryDirect website.
Completing FS Form 1048 requires specific information about the missing bonds, including serial numbers, issue dates, face amounts, and registration details. If serial numbers are unknown, providing the issue date or a date range, along with the Social Security Number, name, and address on the bond, can assist in the search.
The form often requires your signature to be certified by an authorized officer, typically available at a financial institution. If the bonds were stolen, providing a copy of a police report is also requested.
Redeeming Your Bond at a Financial Institution
Cashing a paper bond at a financial institution is common. Contact your bank or credit union to confirm they redeem bonds and inquire about requirements or limits. Not all institutions offer this service, and some only redeem for existing account holders.
At the institution, present the original paper bond and valid government-issued identification. A representative will verify your identity and the bond’s eligibility. You will sign the bond in their presence. Funds are disbursed as cash or deposited directly into your bank account, often the same business day.
Individual banks or credit unions may set their own transaction limits, especially for amounts exceeding $1,000. Paper savings bonds must be redeemed for their entire value; partial redemption of a single paper bond is not possible.
Redeeming Your Bond Through TreasuryDirect
TreasuryDirect, the U.S. Treasury’s online platform, offers another way to redeem paper savings bonds. For Series EE and I bonds, convert the physical bond into an electronic format within your TreasuryDirect account before redemption. Series H and HH bonds are managed and redeemed directly through the system.
To use this method, establish a TreasuryDirect account. This involves providing personal information, your Social Security Number, and linking a bank account for electronic funds transfer. Once set up, initiate conversion of your paper EE or I bonds by creating a “Conversion Linked Account.”
After setting up the conversion account, input your paper bond details, such as serial number, denomination, and issue date, to create a manifest. Print this manifest and mail it, along with your unsigned original paper bonds, to the provided TreasuryDirect address.
Once processed and converted to electronic form, within several weeks, you can redeem them through the “ManageDirect” section of your account. Electronic bonds allow for partial redemptions, with a minimum of $25. Funds are deposited into your linked bank account within two business days after an online redemption.
Tax Implications of Redemption
Interest earned on U.S. savings bonds is subject to federal income tax. When you redeem your bond, the accumulated interest is considered taxable income. However, savings bond interest is exempt from state and local income taxes.
For reporting purposes, the financial institution that cashes your paper bond, or TreasuryDirect if redeemed through their system, will issue a Form 1099-INT. This form details the total interest earned on the bond during its lifetime. You will receive this form in the year the bond is redeemed or matures, whichever occurs first.
Most bondholders choose to defer reporting the interest until the bond is redeemed or reaches final maturity. The interest income is then reported on your federal income tax return for that specific tax year. This approach can be beneficial for tax planning, allowing you to control when the income is recognized.