Dovetonsils
Confused about dryer sheets
- Joined
- May 15, 2006
- Messages
- 6
Not been around her for a while (since I am enjoying retirement).
My question is about what to do NOW with the mass of EE savings bonds that my (now) wife and I accumulated a while back that will start being fully matured starting in about 4 years. We were both single at the time of the initial purchases and each bought 15K of them each year since we had no sort of 401K plan back then and looked to bonds for tax deference.
I never really gave much thought to them and thought I could cash them in whenever I wanted to (after 30 years maturity) but just read something in our local paper that said "You MUST pay Fed income tax on bonds in the year of FINAL Maturity.... Even if you DONT cash them in". "Cashing in a lot of bonds in one year (or being forced to pay taxes on final maturity in mass in my case) could result in enough untaxed interest income to put us in a much higher tax bracket or pay more for Medicare Part B" (which we will be starting to do Medicare next year when we both hit 65.
We never did elect to pay taxes on an annual basis (few people do).
We just bought em for a few years and forgot them until recently.
They were going to be our rainy day fund if we ever needed them but it never rained so they just sat earning their 4 percent (untaxed).
My (now) wife and I BOTH individually maxed out on bonds for many consecutive years and while they are still making 4 percent until they mature, unpaid interest on them will be almost 3 times face over what we paid for them. They will start reaching FINAL Maturity in large lumps for a few years in a row that we were buying these in mass in 90, 91 and 92 (maybe begin of 93). We quit buying them when the rate dropped below the 4 pct mark but still maxed out the year of the drop before it dropped to below the 4 percent since we bought at the begin in each year.
I understand that I can cash them in early and pay the tax on them in that year I cash them. Also am aware that there is a specific month (twice a year) in which interest is paid on these so as not to lose the interest if cashed in on the wrong month.
Request Opinions on weather I should start cashing some out (that are not at full 30 year maturity) NOW to ease off some of the mass interest that I will incur when they all start maturing in mass every year to smooth off at least part of the large interest spike for the later consecutive years. I got 4 years to do this to smooth but if I start in December of this year, I will have 5 years. (or is there a better way?)
They are all 4 percent rates so would it be better to cash the ones from 93 first (worth less) than the ones from 1990?
Sorry for being so long winded here.
Thanks in advance for your thoughts on this.
My question is about what to do NOW with the mass of EE savings bonds that my (now) wife and I accumulated a while back that will start being fully matured starting in about 4 years. We were both single at the time of the initial purchases and each bought 15K of them each year since we had no sort of 401K plan back then and looked to bonds for tax deference.
I never really gave much thought to them and thought I could cash them in whenever I wanted to (after 30 years maturity) but just read something in our local paper that said "You MUST pay Fed income tax on bonds in the year of FINAL Maturity.... Even if you DONT cash them in". "Cashing in a lot of bonds in one year (or being forced to pay taxes on final maturity in mass in my case) could result in enough untaxed interest income to put us in a much higher tax bracket or pay more for Medicare Part B" (which we will be starting to do Medicare next year when we both hit 65.
We never did elect to pay taxes on an annual basis (few people do).
We just bought em for a few years and forgot them until recently.
They were going to be our rainy day fund if we ever needed them but it never rained so they just sat earning their 4 percent (untaxed).
My (now) wife and I BOTH individually maxed out on bonds for many consecutive years and while they are still making 4 percent until they mature, unpaid interest on them will be almost 3 times face over what we paid for them. They will start reaching FINAL Maturity in large lumps for a few years in a row that we were buying these in mass in 90, 91 and 92 (maybe begin of 93). We quit buying them when the rate dropped below the 4 pct mark but still maxed out the year of the drop before it dropped to below the 4 percent since we bought at the begin in each year.
I understand that I can cash them in early and pay the tax on them in that year I cash them. Also am aware that there is a specific month (twice a year) in which interest is paid on these so as not to lose the interest if cashed in on the wrong month.
Request Opinions on weather I should start cashing some out (that are not at full 30 year maturity) NOW to ease off some of the mass interest that I will incur when they all start maturing in mass every year to smooth off at least part of the large interest spike for the later consecutive years. I got 4 years to do this to smooth but if I start in December of this year, I will have 5 years. (or is there a better way?)
They are all 4 percent rates so would it be better to cash the ones from 93 first (worth less) than the ones from 1990?
Sorry for being so long winded here.
Thanks in advance for your thoughts on this.