Am I Correct About I-Bonds?

[Mulligan]

Forgive my curiosity, but have you gotten any interesting offers??

I would have to question my GF's intelligence if she would consider such an offer from me

 

[Mulligan]

Two questions:

Are you absolutely sure you can purchase both online and through the bank this year?

2. Can you purchase them by withdrawling from a severance check? I get taxed on them like they are 'normal' income. So I wonder if I can purchase I bonds by withdrawling from them, plus purchasing from my bank.

100% certain you can buy $5000 online and $5000 from practically any bank. Banks can't sell them after Dec. 31st. Make sure they sell you I Bonds and not EE. You may get a teller who isn't the sharpest tool in the shed as I had to explain them to her. I'm not following what the significance of the severance check is. You can't buy the bond as a tax deferred retirement tool such as an IRA from treasury direct. I'm not sure about that with the bank, though. When you buy the I Bond the interest is taxed deferred until you cash it in. The interest is state income tax free if your state has an income tax. The interest from the bond is treated as normal income as a CD would.

 

[Chuckanut]

The 5K limit on I bonds is so silly. Why do the bankers get such great deals from the Feds, while little guys are limited to such a puny amount of money?

 

[Mulligan]

The 5K limit on I bonds is so silly. Why do the bankers get such great deals from the Feds, while little guys are limited to such a puny amount of money?

I've done some reading on this about I Bonds. In the not too distant past you could buy $30,000 a year. Seems the government only wants the small players (like me) to buy these, and the big players to buy TIPS, etc. At one time you could actually buy I Bonds with a credit card. Up until this year you could also buy dollar coins from treasury at face value and they would pay the shipping. Too bad it still isn't allowed, a person could have made some excellent income having a high max credit card 5% cash back, and just constantly buying I bonds and dollar coins and dumping the coins off at the bank each month!

 

[JPatrick]

Got the bank portion of the I-Bond purchase done today..5k for me -5K for DW.

Unfortunately, the 5K I had planned to buy through Treasury Direct will not happen before November 1. When I dusted off the cobwebs on the account, I discovered the bank we had on file was one from our former location. Long since been closed. (the account)
So I'll just enter one of our current banks and we'll be good--right? Nope, wrong. To accomplish a change of bank one must download a form, complete said form, take form to bank in person to gather verification signature, followed by mailing to Treasury, and lastly, allowing two weeks to process....Oh well, my fault for not taking an occasional peak at those little used accounts.
So, I've set the alarm for late April to look at the May 1 rate. Perhaps a chance to try again..

 

[Mulligan]

Got the bank portion of the I-Bond purchase done today..5k for me -5K for DW.

Unfortunately, the 5K I had planned to buy through Treasury Direct will not happen before November 1. When I dusted off the cobwebs on the account, I discovered the bank we had on file was one from our former location. Long since been closed. (the account)
So I'll just enter one of our current banks and we'll be good--right? Nope, wrong. To accomplish a change of bank one must download a form, complete said form, take form to bank in person to gather verification signature, followed by mailing to Treasury, and lastly, allowing two weeks to process....Oh well, my fault for not taking an occasional peak at those little used accounts.
So, I've set the alarm for late April to look at the May 1 rate. Perhaps a chance to try again..

You couldn't just open up a new account? Reason why I say this, is that I got mine set up and wired money in it within 6 days. The website says 2 weeks but everyone I have read about, including myself got it within a week. You could still get it in before the close of the 31st.

 

[Dimsumkid]

Got the bank portion of the I-Bond purchase done today..5k for me -5K for DW.

Unfortunately, the 5K I had planned to buy through Treasury Direct will not happen before November 1. When I dusted off the cobwebs on the account, I discovered the bank we had on file was one from our former location. Long since been closed. (the account)
So I'll just enter one of our current banks and we'll be good--right? Nope, wrong. To accomplish a change of bank one must download a form, complete said form, take form to bank in person to gather verification signature, followed by mailing to Treasury, and lastly, allowing two weeks to process....Oh well, my fault for not taking an occasional peak at those little used accounts.
So, I've set the alarm for late April to look at the May 1 rate. Perhaps a chance to try again..

I'm in the same boat as you, had to update our bank info and decided to open up a minor account. Interesting that I can immediately add for our minor child with new bank acct info, but we have to wait to change our bank acct before we can buy online. So if anyone is looking to add online and have minors, this is a way to do it without having to wait.

 

[heirloom]

Why not just purchase the 5K from TD when your bank account is taken care of? This way you can puchase 10K this yr and purchase 5K in April.

I'm just trying to understand your theory. Is it only because your not sure what inflation will be next Nov.? I was thinking of purchasing from the bank this month and from TD next month. I'll still get the 6.6% inflation rate....right?

 

[Mulligan]

Why not just purchase the 5K from TD when your bank account is taken care of? This way you can puchase 10K this yr and purchase 5K in April.

I'm just trying to understand your theory. Is it only because your not sure what inflation will be next Nov.? I was thinking of purchasing from the bank this month and from TD next month. I'll still get the 6.6% inflation rate....right?

No one without a fixed rate floor bought years ago is getting 6.6%. If you buy before the close of the 31st this month, you get 4.6% for six months, then 3.06% the following 6 months. If you purchase Nov.1 you get 3.06% for six months , then a new rate determined May 1st for the following 6. To maximize your interest rate you need to get the bonds purchased this month, or you lose the 4.6% opportunity.

 

[JPatrick]

No one without a fixed rate floor bought years ago is getting 6.6%. If you buy before the close of the 31st this month, you get 4.6% for six months, then 3.06% the following 6 months. If you purchase Nov.1 you get 3.06% for six months , then a new rate determined May 1st for the following 6. To maximize your interest rate you need to get the bonds purchased this month, or you lose the 4.6% opportunity.

Yup, if you miss out this month, then you are guessing about the May2012 reset. Certainly possible they could toss out another 0%.

 

[JPatrick]

You couldn't just open up a new account? Reason why I say this, is that I got mine set up and wired money in it within 6 days. The website says 2 weeks but everyone I have read about, including myself got it within a week. You could still get it in before the close of the 31st.

I guess it's worth a try..Thanks

 

[Alan]

Yup, if you miss out this month, then you are guessing about the May2012 reset. Certainly possible they could toss out another 0%.

They should be setting rates according to inflation, but may well keep the fixed portion at zero.

News this week is a big jump in the inflation rate in the UK as measured by CPI. Not saying that inflation is going to kick up here in the US, just that I-Bond variable rates are linked to US inflation.

BBC News - UK CPI inflation rate rises to 5.2% in September

The 5.2% rate is the highest CPI measure since September 2008, and it has never been higher since the CPI measure was introduced in 1997.
The Retail Prices Index (RPI) - which includes mortgage interest payments - rose to 5.6% from 5.2%.
The latest RPI measure is the highest annual rate since June 1991.

 

[nwsteve]

Went to the Treasury Direct website to open an account. Got this message:
"TreasuryDirect: Changes Coming Soon!

Important Notice: To make our customers' experience better, we're updating TreasuryDirect's authentication process. The change will make it easier for you to access your new account.
If you open an account now, we'll send you an access card in about two weeks which you'll use to login. The access card will soon be phased out, so it will only be needed for a short period of time.
The new process replaces the access card with an equally secure method of logging in. So, you may wish to delay opening your account until the new process is in place on or about November 4, 2011."

Looks to me like getting in this quarter will not happen so might has well wait until next when they have their "new-improved" version up.
Nwsteve

 

[Mulligan]

Went to the Treasury Direct website to open an account. Got this message:
"TreasuryDirect: Changes Coming Soon!

Important Notice: To make our customers' experience better, we're updating TreasuryDirect's authentication process. The change will make it easier for you to access your new account.
If you open an account now, we'll send you an access card in about two weeks which you'll use to login. The access card will soon be phased out, so it will only be needed for a short period of time.
The new process replaces the access card with an equally secure method of logging in. So, you may wish to delay opening your account until the new process is in place on or about November 4, 2011."

Looks to me like getting in this quarter will not happen so might has well wait until next when they have their "new-improved" version up.
Nwsteve

If you don't want to mess with it I understand, but the two week process to get your access card has always been on the site. Like I said it only took 6 days, and all the people on fat wallet said they got theirs within a week. The process is easy. I don't even have online banking and use checks to pay my bills, but I bet it didn't take me 10 minutes to get the bonds bought once I got the access card.

 

[Mulligan]

Went to the Treasury Direct website to open an account. Got this message:
"TreasuryDirect: Changes Coming Soon!

Important Notice: To make our customers' experience better, we're updating TreasuryDirect's authentication process. The change will make it easier for you to access your new account.
If you open an account now, we'll send you an access card in about two weeks which you'll use to login. The access card will soon be phased out, so it will only be needed for a short period of time.
The new process replaces the access card with an equally secure method of logging in. So, you may wish to delay opening your account until the new process is in place on or about November 4, 2011."

Looks to me like getting in this quarter will not happen so might has well wait until next when they have their "new-improved" version up.
Nwsteve

Steve - I had a friend who filled out TD account info wednesday, and got his card Saturday, and will deposit the money, Monday. So you still may have time to get it done before the 31st if you choose to.

 

[harley]

I have been thinking about buying I Bonds this year too, after reading many of the comments on this site. In the process of filling out the Treasury Direct application form it looks like they require a bank checking or savings account in order to buy the bonds. No problem there, except I was planning on buying them in my IRA. Is there a way to do that? Or is there a reason not to?

 

[Mulligan]

I have been thinking about buying I Bonds this year too, after reading many of the comments on this site. In the process of filling out the Treasury Direct application form it looks like they require a bank checking or savings account in order to buy the bonds. No problem there, except I was planning on buying them in my IRA. Is there a way to do that? Or is there a reason not to?

Doesn't look to practical. This short article may help explain.

http://www.bankrate.com/finance/retirement/difficult-to-put-savings-bond-in-roth.aspx

 

[nwsteve]

Mulligan
Thanks for the "heads-up" on the turnaround time. We got our "paper" bonds bought at the bank on Friday. I will fill out the TD form and see what happens. Thanks again
S

 

[Corporate ORphan]

I'm trying to get DH to buy the maximum amount of I-Bonds before 11/1. He is leary of buying them online. Anyone know "what's the adequate
amount of documentation in the event Treasury Direct loses the record"? We already have acccounts but we haven't bought any bonds since they lowered the limit. I think I used to go to the Federal Reserve Bank in person and buy the bonds.

Thanks!!

 

[harley]

I'm trying to get DH to buy the maximum amount of I-Bonds before 11/1. He is leary of buying them online. Anyone know "what's the adequate
amount of documentation in the event Treasury Direct loses the record"? We already have acccounts but we haven't bought any bonds since they lowered the limit. I think I used to go to the Federal Reserve Bank in person and buy the bonds.

Thanks!!

I'm still waiting for my access card, but I'm sure with any purchase you get a receipt, which can be filed electronically or printed off and put in a shoebox. I can't imagine they are less capable than eBay sellers.

 

[Alan]

I'm trying to get DH to buy the maximum amount of I-Bonds before 11/1. He is leary of buying them online. Anyone know "what's the adequate
amount of documentation in the event Treasury Direct loses the record"? We already have acccounts but we haven't bought any bonds since they lowered the limit. I think I used to go to the Federal Reserve Bank in person and buy the bonds.

Thanks!!

Similar to if you lost your paper bonds. It is easier if you have a record of the serial numbers.

You require your SSN and valid photo ID. The savings bond wizard which you download from the site allows you to enter the serial number of each bond. You can then save the file on your PC and keep a copy somewhere safe (or print out a copy). Or you can record the serial numbers just like you do for your paper bonds.

 

[Alan]

I have been thinking about buying I Bonds this year too, after reading many of the comments on this site. In the process of filling out the Treasury Direct application form it looks like they require a bank checking or savings account in order to buy the bonds. No problem there, except I was planning on buying them in my IRA. Is there a way to do that? Or is there a reason not to?

Not sure how to do that from an IRA.

The interest on the I-Bonds accumulates tax-deferred so there is that advantage.

 

[harley]

Not sure how to do that from an IRA.

The interest on the I-Bonds accumulates tax-deferred so there is that advantage.

Yeah, it turns out (see Mulligan's post above) that it doesn't really work with IRAs. His link is about Roth's, but there's another link in that article about TIRAs. So I'll just do it the old fashioned way. Hopefully I'll get my access card before the 30th.

 

[Mulligan]

I'm trying to get DH to buy the maximum amount of I-Bonds before 11/1. He is leary of buying them online. Anyone know "what's the adequate
amount of documentation in the event Treasury Direct loses the record"? We already have acccounts but we haven't bought any bonds since they lowered the limit. I think I used to go to the Federal Reserve Bank in person and buy the bonds.

Thanks!!

I'm assuming you have already bought your paper limit of 10 k already? I did a lot of reading because I'm not like your husband, but each year, I break down a little more. There is no way around doing it electronically if you want to max it. They are really trying to get out of the paper business except for the backdoor tax refund, and who knows how much longer that will go. Just print off what it says when it's deposited. Remember you will have a record from the wire transfer from your bank showing it went to treasury. I must really be turning a new technological leaf. I bought mine a month ago and still haven't even printed off a record of it. I did access the account to make sure they were there though.

 

[Dimsumkid]

Got the bank portion of the I-Bond purchase done today..5k for me -5K for DW.

Unfortunately, the 5K I had planned to buy through Treasury Direct will not happen before November 1. When I dusted off the cobwebs on the account, I discovered the bank we had on file was one from our former location. Long since been closed. (the account)
So I'll just enter one of our current banks and we'll be good--right? Nope, wrong. To accomplish a change of bank one must download a form, complete said form, take form to bank in person to gather verification signature, followed by mailing to Treasury, and lastly, allowing two weeks to process....Oh well, my fault for not taking an occasional peak at those little used accounts.
So, I've set the alarm for late April to look at the May 1 rate. Perhaps a chance to try again..

I found a way for you to change/update your bank info w/o having to wait for your mail in form to take effect. All you need to do is create a linked custom acct under "Manage Direct". Setup your new bank info, then you can purchase online! Apparently, this creates a linked account and the waiting rules don't apply, I did it on my son's minor account and it let me create a new custom acct for myself and new bank acct data for each acct type and I can make my online purchase now.