Where and How to Cash Your Savings Bonds
Navigate the process of cashing your savings bonds. Discover where and how to redeem them, from preparation to special situations.
Savings bonds are a secure, government-issued investment designed to accrue interest over time. Backed by the full faith and credit of the U.S. government, they offer a low-risk savings option. This article outlines the process and considerations for cashing savings bonds.
Understanding Your Savings Bond Before Cashing
Before cashing, gather specific details about your savings bond. Savings bonds come in various series with distinct interest accrual methods, though cashing procedures are similar. Bonds must be held for at least one year from their issue date before redemption.
The TreasuryDirect website’s Bond Value Calculator determines a bond’s current value and maturity date. This tool requires the bond’s serial number, series, and issue date for accurate valuation. Knowing the bond’s value and maturity helps in deciding when to redeem.
Eligibility for cashing a bond includes the original owner, a co-owner, a designated beneficiary upon the owner’s passing, or a legally appointed representative. Specific documentation may be required to prove authority to redeem. For redemption, bondholders must present valid photo identification and their Social Security number.
For paper savings bonds, proper endorsement is required. This involves signing the back of the bond in the presence of an authorized individual at the cashing location to validate the transaction.
Primary Methods for Cashing Savings Bonds
Cashing savings bonds can be accomplished through several methods, each tailored to different bond types and situations. For paper savings bonds, financial institutions like banks and credit unions are a redemption point. When cashing a paper bond at a financial institution, present the bond along with your valid photo identification.
Contact your bank or credit union beforehand, as some institutions may require you to be an account holder or may have limitations on the value of bonds they will cash. The financial institution will process the redemption and provide funds directly or deposit them into an account.
Electronic savings bonds, issued through TreasuryDirect, are redeemed online via the TreasuryDirect website. After logging into your account, select the specific bond(s) to redeem and choose a linked bank account for direct deposit. TreasuryDirect also offers a service to convert paper savings bonds into electronic form, which can then be managed and redeemed online.
In certain circumstances, such as when local financial institutions cannot assist or for bonds belonging to deceased owners, mail redemption may be necessary. This process involves completing a specific Treasury form, such as FS Form 1522, which details the redemption request and provides account information for direct deposit. The completed form, along with the paper bond, should be signed as instructed and mailed to the Bureau of the Fiscal Service. For security, send documents via certified mail for tracking and proof of delivery.
Important Considerations and Special Circumstances
When a savings bond is lost, stolen, or destroyed, report the incident and initiate a request for replacement or redemption through TreasuryDirect. The Bureau of the Fiscal Service maintains records of all issued bonds, allowing for reissuance or cashing once ownership is verified.
Cashing bonds for a deceased owner involves specific procedural requirements. The authorized individual, such as an executor or designated beneficiary, will need to provide documentation like a certified death certificate and, in some cases, probate court documents or an affidavit of small estate. Specific forms, such as FS Form 1455, may be required to transfer or redeem the bonds.
For bonds registered to or owned by minors, a parent or legal guardian has the authority to cash them on the minor’s behalf. The adult responsible will need to present their own identification and proof of guardianship.
Interest earned on savings bonds is subject to federal income tax, though this tax can be deferred until the bond is redeemed or reaches maturity. This income may also be subject to state or local taxes, depending on jurisdiction. Consulting with a tax professional can provide tailored guidance regarding the tax implications of cashing savings bonds.