The I Bond Thread

[homestead]

No, you can transfer it when you wish as long as it doesn’t exceed their limit for that year. That’s why some folks are buying multiple years worth now.

I was thinking of the case where the recipient is already maxed out for 2022.

 

[Dash man]

I Bond Rate May 2022

I was thinking of the case where the recipient is already maxed out for 2022.

You have control over when to deliver the gift. It’s not automatically done for you. If you buy one today, you can deliver it next week IF they haven’t already purchased or received their maximum $10k this year.
If you buy multiple gifts for someone, you can deliver one per calendar year. They have to have a TD account open in the recipients name/SSN to deliver the gift.

 

[Jerry1]

Kind of nit picky, but can I transfer the gift on 1/1 or does it have to be a year after the current $10K was met? So we bought ours today. If we bought each other gifts, could we transfer the gifts on 1/1 or would we have to wait until this date in 2023?

 

[Dash man]

Kind of nit picky, but can I transfer the gift on 1/1 or does it have to be a year after the current $10K was met? So we bought ours today. If we bought each other gifts, could we transfer the gifts on 1/1 or would we have to wait until this date in 2023?

Yes, it’s $10,000 per calendar year. You can buy a gift in December and deliver it January 1 if you choose.

 

[Gumby]

You can deliver the gift whenever you want. The timing issue that people are discussing is that one person can only receive or purchase for themselves $10k per year. So you couldn't deliver it this year if they already purchased $10k for themselves, because that would put them over the limit. The new year, with a new $10k limit, starts on 1/1/23, so you could deliver it then. However, the recipient can't cash it in until it has been a full year after initial purchase.

 

[Jerry1]

Great information. Thanks everyone!

 

[Dreamer]

Purchases have been made for $10,000 gifts for DH and myself for 2024. Should be in the gift box tomorrow.

I think that is as far as I am going to go. DH starts getting nervous when he sees the cash balance going down.

 

[Jerry1]

Purchases have been made for $10,000 gifts for DH and myself for 2024. Should be in the gift box tomorrow.

I think that is as far as I am going to go. DH starts getting nervous when he sees the cash balance going down.

My thoughts are to wait until the next rate adjustment is announced and do my first gift then. I’m thinking it will work somewhat like a ladder. Buy them in ways that the get past the one year mark at different times. Either way, right now, this is a darn good deal.

 

[cyber888]

Thanks for the Gifting info, I'm buying an additional $20,000 ($10k for me and $10K for DW as a gift). Great Loophole.

 

[Drake3287]

"It's always simplier to get the registrant part correct the first time (it's saved in the list for repeated uses) but you can fix it"

Thank you. For some reason I thought it could only be done after the account was funded.

 

[Sunset]

My thoughts are to wait until the next rate adjustment is announced and do my first gift then. I’m thinking it will work somewhat like a ladder. Buy them in ways that the get past the one year mark at different times. Either way, right now, this is a darn good deal.

IMHO, that is a mistake.
You are only missing out on 7.12% for 6 months. Not gaining anything.

They never will really act as a ladder as all the bonds get the same rate every 6 months. Ok maybe a short 1 step 6 month ladder , but no advantage.

We bought our gifts now for: 2023, 2024, 2025
All will earn 7.12% then ~9.6% then (guess 5%) , ....

We will be able to deliver and cash out the first gift while it's earning 5% or wait if we want. But it will have earned 7.12% then ~9.6%

 

[pb4uski]

So on 1/1/2023 does one have to remember to submit the gift to the recipient or does it automatically transfer on the new year?

Yes. I'll have to log in and 'deliver' the gift to the recipient.

 

[pb4uski]

Kind of nit picky, but can I transfer the gift on 1/1 or does it have to be a year after the current $10K was met? So we bought ours today. If we bought each other gifts, could we transfer the gifts on 1/1 or would we have to wait until this date in 2023?

1/1 because the $10k limit is annually per calendar year.

 

[Montecfo]

I'd you view this inflation spike as a bit of an anomaly, you definitely do not want to delay as these great rates will eventually end.

I added 2023 gifts. Just joining the parade.

 

[bobbyr]

I am still confused about the gifts.

If you are limited to $10k per year, how does the gift change or improve on that?

What are you gaining by adding 2023 gifts now versus signing up/purchasing on 1.1.2023?

 

[Magus]

I am still confused about the gifts.

If you are limited to $10k per year, how does the gift change or improve on that?

What are you gaining by adding 2023 gifts now versus signing up/purchasing on 1.1.2023?

The current and next interest rates of 7.12% and 9.62% for the next 12 months, starting the clock on the 1 year withdraw limitation now and starting the clock on the 5 year 3 month penalty for withdrawals now. Plus you get the interest for the entire month of April now even though at the end if you sneak in today or tomorrow

 

[pb4uski]

I am still confused about the gifts.

If you are limited to $10k per year, how does the gift change or improve on that?

What are you gaining by adding 2023 gifts now versus signing up/purchasing on 1.1.2023?

If you buy a gift today and deliver it to the recipient on 1/1/23, you will get 7.12% for the first 6 months (4/1/22-9/30/22) and 9.62% for the second six months (10/1/22-3/30/23) and the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 4/1/23 and redeem without penalty anytime on or after 4/1/27.

If you buy on 1/1/23, you will get [-]9.62% for the first 6 months (1/1/23-6/30/23) and [/-]the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 1/1/24 and redeem without penalty anytime on or after 1/1/28.

So buy using the gift mechanism to buy today you 1) lock in that 7.12% rate for six months and 9.62% for the next six months, 2) get a 9 month head start on the one year minimum holding period and 3) get a 9 month head start on the 5 year holding period for 3-month early withdrawal penalties.

Pretty much a free lunch methinks.

ETA: Mangus' observation that the rate on 1/1/23 is unknown.

 

[intent]

DW and I each bought $10K this year, each of us is the registrant with POD to the other.

We then added a new registrant each which is the other person and beneficiary being ourself. So I added DW as owner and myself as beneficiary, and clicked on "gift" checkbox near the bottom.

Then we each bought three $10K gifts for the other person (so $60K in total). These gifts start earning interest and the 1 year holding period immediately. We had a bunch of cash sitting in the bank earning 0.5% so it was easy for us.

I personally think buying one $10K gift is a sure bet right now as it will be cash-able next year and will have earned ~800 interest even if inflation goes to zero.

We are being hopeful and aggressive by purchasing 3 years worth of gifts, as only 1 gift per year can be redeemed (given and then cashed). So if rates/inflation drops to zero, the third gift will end up being a small total 3 year return of ~800 which is 2.67% averaged out. Still better than all/most 3 year returns and fully safe (unless USA gov't collapses).

I'm really interested in this, but am not fully understanding. On the Treasury Direct website it says:

How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.

It sounds like you discovered a way around this limit. Am I understanding that correctly?

 

[cyber888]

IMHO, that is a mistake.

You are only missing out on 7.12% for 6 months. Not gaining anything.



They never will really act as a ladder as all the bonds get the same rate every 6 months. Ok maybe a short 1 step 6 month ladder , but no advantage.



We bought our gifts now for: 2023, 2024, 2025

All will earn 7.12% then ~9.6% then (guess 5%) , ....



We will be able to deliver and cash out the first gift while it's earning 5% or wait if we want. But it will have earned 7.12% then ~9.6%

Great for you .. bought our gifts for 2023 yesterday. Will buy our 2024 before the 9.62% runs out later this year.

 

[Magus]

If you buy a gift today and deliver it to the recipient on 1/1/23, you will get 7.12% for the first 6 months (4/1/22-9/30/22) and 9.62% for the second six months (10/1/22-3/30/23) and the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 4/1/23 and redeem without penalty anytime on or after 4/1/27.

If you buy on 1/1/23, you will get 9.62% for the first 6 months (1/1/23-6/30/23) and the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 1/1/24 and redeem without penalty anytime on or after 1/1/28.

So buy using the gift mechanism to buy today you 1) lock in that 7.12% rate for six months, 2) get a 9 month head start on the one year minimum holding period and 3) get a 9 month head start on the 5 year holding period for 3-month early withdrawal penalties.

Pretty much a free lunch methinks.

Technically we don't know that they will get 9.62% if they buy on 1/1/23 as that will be a new rate set 11/1/22

 

[Montecfo]

Great for you .. bought our gifts for 2023 yesterday. Will buy our 2024 before the 9.62% runs out later this year.

Hi Cyber888,

Is there a benefit to waiting on your 2024 purchase?

thanks.

 

[pb4uski]

Technically we don't know that they will get 9.62% if they buy on 1/1/23 as that will be a new rate set 11/1/22

You are right... the 9.62% will apply for the first 6 months of ibonds bought between 5/1/22 and 10/31/22 so an ibond bought on 1/1/23 will get a rate that will be declared in Nov 2022.

Given the known vs the unknown that makes the case for buying a for sure 7.12% for the first 6 months and a for sure 9.62% for second 6 months more attractive than some unknown if one buys on 1/1/23.

The composite rate for I bonds issued from November 2021 through April 2022 is 7.12 percent. This rate applies for the first six months you own the bond.

 

[bobbyr]

If you buy a gift today and deliver it to the recipient on 1/1/23, you will get 7.12% for the first 6 months (4/1/22-9/30/22) and 9.62% for the second six months (10/1/22-3/30/23) and the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 4/1/23 and redeem without penalty anytime on or after 4/1/27.

If you buy on 1/1/23, you will get [-]9.62% for the first 6 months (1/1/23-6/30/23) and [/-]the future declared rate for each six month period thereafter and you can redeem your ibond anytime on or after 1/1/24 and redeem without penalty anytime on or after 1/1/28.

So buy using the gift mechanism to buy today you 1) lock in that 7.12% rate for six months and 9.62% for the next six months, 2) get a 9 month head start on the one year minimum holding period and 3) get a 9 month head start on the 5 year holding period for 3-month early withdrawal penalties.

Pretty much a free lunch methinks.

ETA: Mangus' observation that the rate on 1/1/23 is unknown.

thank you - I get it now!

now to find how to do it on the site...I guess I have until Saturday to pick up the 7.12?

 

[bobbyr]

do you put today's date or 1/1/23 for purchase date?

 

[Dash man]

thank you - I get it now!



now to find how to do it on the site...I guess I have until Saturday to pick up the 7.12?

I would do it no later than tomorrow before close of business. I’m not sure what the impact of a weekend might be. Maybe someone else knows?