What Does POD Mean on a Savings Bond?

Savings bonds are a common investment for many individuals, offering a secure way to save money with interest. A crucial term associated with these bonds, particularly concerning their transfer upon the owner’s death, is “Payable on Death” (POD). Understanding the implications of a POD designation is important for both bond owners and those who might be named as beneficiaries.

Understanding Payable on Death (POD)

“Payable on Death” (POD), in the context of savings bonds, refers to a designation that allows the bond to transfer directly to a named beneficiary upon the sole owner’s death. This mechanism facilitates a non-probate transfer, meaning the bond bypasses the often lengthy and public probate court process. The primary purpose of a POD designation is to ensure a smooth and direct transfer of assets to the intended recipient outside of a will.

A POD designation differs significantly from co-ownership of a bond. With a POD, the named beneficiary has no rights or access to the bond while the original owner is alive. In contrast, a co-owner has equal rights to the bond, including the ability to redeem it, at any time.

Adding or Changing a POD Beneficiary

Designating a POD beneficiary can be done when purchasing new savings bonds or by updating existing ones. For electronic bonds purchased through TreasuryDirect, the POD beneficiary can be specified during the initial purchase process. For paper savings bonds, or to add a POD beneficiary to an existing electronic bond, specific steps are involved.

To add or change a POD beneficiary for existing bonds, you typically need to use FS Form 4000, titled “Request to Reissue United States Savings Bonds.” This form is used for various reissuance requests, including updating beneficiary information. The form requires detailed information about the bond, such as its serial number, issue date, and denomination, along with the full name, Social Security Number, and address of the intended beneficiary. You can obtain FS Form 4000 from the TreasuryDirect website.

Once the FS Form 4000 is accurately completed with all necessary details, including the specific sections for adding or changing a POD beneficiary, it must be submitted. For paper bonds, this generally involves mailing the completed form along with the original paper bonds to the Treasury Retail Securities Site. Electronic bonds can often be updated directly through your TreasuryDirect account by selecting the “ManageDirect” tab and editing the security registration.

Claiming Bonds with a POD Designation

Upon the death of the sole owner of a savings bond with a POD designation, the named beneficiary automatically becomes the rightful owner. This direct transfer typically avoids the probate process, allowing for a more streamlined claiming procedure. To claim the bond, the POD beneficiary will need to provide proof of the owner’s death, such as a certified death certificate.

For paper bonds, beneficiaries may need to submit FS Form 1048, “Claim for Lost, Stolen, or Destroyed United States Savings Bonds,” providing details about the bond and the deceased owner. For electronic bonds held in a TreasuryDirect account, the beneficiary can typically claim the bond through their own TreasuryDirect account after submitting the required documentation. The interest earned on the bond is generally taxable as ordinary income for the beneficiary in the year it is redeemed.