The I Bond Thread

[pb4uski]

Yeah, I'm undecided, but if I did I could add $60k... $20k for 2022 allocation and in gift boxes for 2023 and 2024.

 

[pb4uski]

Ok, so I'm still thinking about this. We currently have no living trusts.

I would, using software, create the pb4uski ibond trust and the pb4uski DW ibond trust.

Each trust would use our SSNs for TINs. Each trust would buy $30k of ibonds in April... $10k for the trust itself and $20k as gifts for the spouse's trust. So that would be another $60k put to work at 7.12% for the first 6 months... etc and would start the one year and 5 year clocks.

What do you think?

 

[Accidental Retiree]

Ok, so I'm still thinking about this. We currently have no living trusts.

I would, using software, create the pb4uski ibond trust and the pb4uski DW ibond trust.

Each trust would use our SSNs for TINs. Each trust would buy $30k of ibonds in April... $10k for the trust itself and $20k as gifts for the spouse's trust. So that would be another $60k put to work at 7.12% for the first 6 months... etc and would start the one year and 5 year clocks.

What do you think?

Harry Sit’s article says the following:

“Only a personal account can buy or receive gifts. A trust or a business can neither buy a gift nor receive a gift.”


https://thefinancebuff.com/buy-i-bonds-as-gift.html

 

[11522914]

My wife and I just gifted 10k to each other in our respective Treasury Direct accounts.

The process couldn't have been any easier.

Thanks to everyone for letting me know this was possible.

 

[Phroig]

My wife and I just gifted 10k to each other in our respective Treasury Direct accounts.

The process couldn't have been any easier.

Thanks to everyone for letting me know this was possible.

+1
My thanks as well.

 

[NextInLine]

I bought 2 $10,000 I-Bonds the end of October for the first time and just have a very simple question. When do I see the monthly interest?

I understand the semi-annual compounding and rules on 1 year / 5 year and losing 3 months of interest prior to 5 years. But, when does an actual interest payment show up on:

https://www.treasurydirect.gov/tdhome.htm

Because the interest is only credited semi-annually, am I going have to wait until April 1, 2022 to see potential interest posted on their website for October 2021 I-Bonds? I thought I would see it monthly, but understood it wouldn't be added to the principle except twice a year. I didn't see anything today, November 1.

You will see interest after 6 months.

 

[Bruno]

Ibonds

I logged onto Treasury Direct and created a converted bond account and created a manifest and will mail them in later today. Converting them is a bit of a PITA but doesn't really take too long... I was familiar with the process having helped DS convert a bunch of EE bonds that he received as a kid to electronic a couple years ago..

Is there good reason to thru all that PITA? I was told that they are saved at different location on ur TD account and TOTAL $$ dont show up when you first login. I was told we can just keep the ibonds (SS Box) and when the time comes they can be cash in at the BANK.

 

[Dash man]

Is there good reason to thru all that PITA? I was told that they are saved at different location on ur TD account and TOTAL $$ dont show up when you first login. I was told we can just keep the ibonds (SS Box) and when the time comes they can be cash in at the BANK.

Converted paper iBonds are initially put into a separate conversion account, but can be transferred into your primary account later. I see all mine on the same place.

 

[MichealKnight]

I-Bonds 7%

It seems that I-BONDS pay 7.12% -- I'm wondering if anyone here has invested in these?

To me, the sole risk is Uncle Sam going out of business - - so heck, a low risk 7% seems rather palatable to me. I have to hold it for 5 years - otherwise there's a small penalty.

Right now my plan calls for 5 years living expenses in cash and I'm wondering - what's wrong with taking $20,000 of that (one each for me and DW) -- and earning 7%?

I'm asking because - there's gotta be some catch and someone here must know about it. After all, when CDs are 1% - why is the world's most secure company - paying 7%? Thanks

 

[Gumby]

I am merging this with the other I-bond thread, where you will find more than you ever thought there was to know about I-bonds.

 

[Retire2023]

The Hubs and I just purchased gift I-Bonds for each other! We do learn so much from each other on this forum! A year ago, I had no clue what I-Bonds even were...now we have made a combined 8 purchases! ��

 

[Bruno]

Converted paper iBonds are initially put into a separate conversion account, but can be transferred into your primary account later. I see all mine on the same place.

Thank You!! Dash man.

 

[Chuckanut]

I
Right now my plan calls for 5 years living expenses in cash and I'm wondering - what's wrong with taking $20,000 of that (one each for me and DW) -- and earning 7%?

+1 That's a good use of I bonds, IMO.

I plan to buy enough I Bonds to cover my emergency money.Given the purchase limits when buying I Bonds, it will work OK for me. If I am going to have a small stash of money to ride out a Bear market, it might as well be in something that will do OK in inflationary times.

 

[Gearhead Jim]

Someone said that investment income (like iBonds) in a trust is taxed at a higher rate than personal investment income.
True or false? Any special techniques to avoid the problem, if it actually exists?

 

[pb4uski]

Is there good reason to thru all that PITA? I was told that they are saved at different location on ur TD account and TOTAL $$ dont show up when you first login. I was told we can just keep the ibonds (SS Box) and when the time comes they can be cash in at the BANK.

I guess I think a short one-time PITA is preferable to the risk of losing paper bonds and the PITA of getting the lost paper bonds replaced. While grumble about it, it was only an hour or so to set up the account of the paper bonds which is tied to my regular Treasury Direct account, input the 12 paper bonds with their numbers, print out the transmittal and prepare the mailing.

 

[tulak]

I guess I think a short one-time PITA is preferable to the risk of losing paper bonds and the PITA of getting the lost paper bonds replaced. While grumble about it, it was only an hour or so to set up the account of the paper bonds which is tied to my regular Treasury Direct account, input the 12 paper bonds with their numbers, print out the transmittal and prepare the mailing.

Agree. Tedious, but not a big deal.

 

[pb4uski]

Someone said that investment income (like iBonds) in a trust is taxed at a higher rate than personal investment income.

True or false? Any special techniques to avoid the problem, if it actually exists?

It depends on the trust, but many trusts are effectively passthrough so the income is taxed the same as if you owed the asset directly.

 

[Gearhead Jim]

Thanks!

 

[Montecfo]

Someone said that investment income (like iBonds) in a trust is taxed at a higher rate than personal investment income.
True or false? Any special techniques to avoid the problem, if it actually exists?

It's true, generally.

But if you form a revocable trust which qualifies as a "grantor trust" the tax is at your rate and you can dissolve the trust at any time.

I was discussing doing this earlier in thread. Not sure it's worth my time.

 

[Linney]

It's been 4 months since my first Gift I-Bond purchase back in December 2021. As of today I can see the interest being accrued in the TreasuryDirect Gift Box. Sweet!

For those interested here is a screenshot of what it looks like. (And remember, 3 months of interest is held back in case of early redemption, so the current value only shows 1 month's worth of interest)

 

[MichealKnight]

7% - how long?

I've been googling and I thought I'd make sure from folks who actually bought these bonds.

$10,000 I-BOND. 7.12%.

Does that mean the investor is paid 7.12% per year, for 30 years?

Or, does it mean that as inflation reduces - the same bond will get less interest and if that's the case - technically it means 7.12% now - could drop to 1% some other year?

Thanks

 

[braumeister]

It resets every six months.

 

[RetiredAndLovingIt]

The rate is locked in for 6 months only then it resets so yes it could go up or down.

 

[MichealKnight]

It says on their website, something to the effect that they use their calculated inflation rate, and then some sort of fixed rate.

Does that mean, the rate will be at least whatever the government stated inflation rate is? Thanks

 

[Gumby]

The formula is spelled out on the Treasury website. For the next rate adjustment, you will take the CPI-U for March 2022 (which will be reported on 4/10/22) and divide it by the CPI-U for September 2021. That should come out to around 1.04. Which is about 4% for 6 months or an annual rate of about 8%. They will use that to reset the rates starting on May 1, 2022. On November 1, 2022, the rate will reset again. And it will be the CPI-U for September 2022 divided by the CPI-U for March 2022. What that rate will be depends on inflation between March and September.

So, for example, the $10k in I-bonds I bought in December 2021 will earn an annual rate of 7.12% (the current rate) until they reset on June 1, 2022. Then, $356 will be added to the principal (compounding), and that $10,356 will earn at an annual rate of ~8% until December 1, when the rate will reset again. And the $10k I bond I bought in January will earn 7.12% until July 1, 2022, when it will compound (i.e, - add $356 to principal), reset to ~8% and stay there until January 1, 2023.

The fixed rate (currently 0%) probably will not change until the rate for TIPs goes positive. It is discretionary with the Treasury.