The I Bond Thread

[Gumby]

To clarify:

You need 2 separate Treasury Direct accounts, one for each person who owns the I-bonds.

You can use 1 account to fund the I-bond purchases for both people. I have used a joint checking account to fund the I-bond purchases for both my spouse and I for years now, no problems whatsoever in doing this.

Thanks for clarifying that. I assumed Helen was talking about Treasury Direct accounts and was insufficiently clear about that assumption. The young wife and I each have a Treasury Direct account but they are both funded from our joint checking account.

 

[misanman]

I have a maybe stupid question about iBond gifting: If I buy a $10,000 iBond with the intention to gift it at a later date, and it accrues interest prior to the gifting, is the interest "orphaned" for a period of time because the of the $10,000 yearly limit? Or is the $10,000 limit only in terms of the original purchase amount?

 

[Mulligan]

I have a maybe stupid question about iBond gifting: If I buy a $10,000 iBond with the intention to gift it at a later date, and it accrues interest prior to the gifting, is the interest "orphaned" for a period of time because the of the $10,000 yearly limit? Or is the $10,000 limit only in terms of the original purchase amount?

The limit only pertains to the purchased amount not any accrued interest.

 

[simple girl]

FYI: here is a video from Treasury Direct on how to purchase Ibonds as gifts for others.

https://www.treasurydirect.gov/indiv/tools/purchasing-a-gift-bond.htm

 

[calmloki]

I watched that movie this morning after Gal and I both got nice notes from TD letting us know we had bought too much this year and we could expect $10k refunds in 8-10 weeks. Sigh. Looks like just what I did. Dunno how I screwed it up.
Checked the 'this is a gift' boxes, used the other person as the registrant and sole owner. At least I only bought for delivery in 2023, or such was the intent. I expect TD will overperform and have our money back to us in a week or so. Then I can try again. Gal wasn't real happy with my failure and wasn't eager for me to try, try again with different money.

 

[Done]

I Bond rate 11/2021

Gal and I both got nice notes from TD letting us know we had bought too much this year

Is it possible that you purchased in joint ownership? If you are including yourself in the gift registration, it needs to be as Recipient POD Self using the beneficiary option, not Recipient WITH Self as second owner.

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

 

[calmloki]

Is it possible that you purchased in joint ownership? If you are including yourself in the gift registration, it needs to be as Recipient POD Self using the beneficiary option, not Recipient WITH Self as second owner.

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

No, was afraid that using joint might screw up the gifting, so have them as sole owner, not even a beneficiary named (also something Gal isn't happy about). We each have TD sign-ins and individual accounts - I did sign into both accounts from the same machine, which I'll avoid next time.

 

[Gearhead Jim]

I'm looking for some comments about the advantages/disadvantages of buying more than $10k/yr by using a trust vs gifting to spouse. I can seem some obvious things, but there may be other issues I haven't noticed.

Help!

 

[Dash man]

I'm looking for some comments about the advantages/disadvantages of buying more than $10k/yr by using a trust vs gifting to spouse. I can seem some obvious things, but there may be other issues I haven't noticed.

Help!

I believe you can only use a trust if it has its own federal tax ID number instead of your social security number.
If I’m mistaken, please let me know.

 

[simple girl]

I watched that movie this morning after Gal and I both got nice notes from TD letting us know we had bought too much this year and we could expect $10k refunds in 8-10 weeks. Sigh. Looks like just what I did. Dunno how I screwed it up.
Checked the 'this is a gift' boxes, used the other person as the registrant and sole owner. At least I only bought for delivery in 2023, or such was the intent. I expect TD will overperform and have our money back to us in a week or so. Then I can try again. Gal wasn't real happy with my failure and wasn't eager for me to try, try again with different money.

Hmmmm....I did everything the same exact way, so we'll see if I get a similar message from the TD. How long did it take before they gave you that message?

 

[calmloki]

The next morning.

 

[Gearhead Jim]

I believe you can only use a trust if it has its own federal tax ID number instead of your social security number.
If I’m mistaken, please let me know.

Other folks say that you can use at least one trust with the same number as your own SS, but I haven't tried it and so I don't know.

 

[Accidental Retiree]

Other folks say that you can use at least one trust with the same number as your own SS, but I haven't tried it and so I don't know.

We opened an account for our trust using the same SS as one of our individual accounts.

 

[Dash man]

We opened an account for our trust using the same SS as one of our individual accounts.

Okay, thanks for clarifying. I stand corrected!

 

[pb4uski]

I'm thinking more about this $5k estimated tax payment as I generally don't like having money on deposit with the feds... risk of tax identity theft, etc.

At this point I have paid in a tad more than my tax will be so I'm not subject to any underpayment penalties.

Let's say that I file my return in February. Why can't I make a $5k estimated payment for 2021 in February 2022 just before I file my return and file my return electronically the day that the withdrawal for the $5k estimated payment hits my bank account? The only thing that I would need to be careful of is that the $5k is clearly designated to be a 2021 estimated tax payment.

Wondering if that would work. Thoughts?

Well, it worked. When I had my tax return finalized I made an estimated payment via EFTPS to increase my refund to $5,000. I efiled our return on March 3 and it was accepted that day. Yesterday, March 22, I received 12 envelopes in the mail with i-bonds.... 4-$1,000, 1-$500, 1-$200 and 6-$[-]100[/-]50.

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.

An easy-peasy way to add $5k to your annual limit.

 

[RunningBum]

About 12 days after mailing my paper I-bonds I got an email that they were received, and due to high volume it would be 4-6 weeks to review and process the request. I'm less anxious now because I know they are in the right place, and not lost in the mail or in the US Treas mail room.

 

[finnski1]

Well, it worked. When I had my tax return finalized I made an estimated payment via EFTPS to increase my refund to $5,000. I efiled our return on March 3 and it ws accepted that day. Yesterday, March 22, I received 12 envelopes in the mail with i-bonds.... 4-$1,000, 1-$500, 1-$200 and 6-$100.

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.

An easy-peasy way to add $5k to your annual limit.

Excellent.
Wonder how they came up with the distribution of various bonds.

 

[RunningBum]

4-$1,000, 1-$500, 1-$200 and 6-$100.

Excellent.
Wonder how they came up with the distribution of various bonds.

I'll say it's excellent. pb4 hit the jackpot and got $5300 on a $5000 investment! I assume it's 6x$50 like I got.

I'm guessing this is from the days when people held the paper bonds and wanted to be able to redeem odd amounts without issuing a whole bunch of bonds (100x$50) You can redeem for any amount that's a multiple of $50, and still have a lot of combinations left.

 

[pb4uski]

^^^ You're right... typo on my part... they were $50's... fixed post.

 

[Montecfo]

We opened an account for our trust using the same SS as one of our individual accounts.

So e.g., "Trust FBO Accidental Retiree" ?

That sounds like something worth doing.

I wonder if each spouse can do that?

 

[Accidental Retiree]

So e.g., "Trust FBO Accidental Retiree" ?

That sounds like something worth doing.

I wonder if each spouse can do that?

We have a joint trust. We titled the Treasury Direct entity account exactly as shown on our Certification of Trust. Our trust is connected to my husband’s SSN.

I think I have read somewhere you’d need 2 separate trusts with 2 separate SSNs, but I can’t recall for sure.

 

[MMxyz74]

So e.g., "Trust FBO Accidental Retiree" ?

That sounds like something worth doing.

I wonder if each spouse can do that?

Yes, each spouse can have a separate trust with Treasury Direct which uses their respective social security. For example "Trust FBO Accidental Retiree" and "Trust Accidental Retiree Spouse".

My wife and I each purchased $10K in I-Bonds in Nov 2021 in our names only. A total of $20K in 2021.

In Jan 2022 we each purchased an additional $10K in I-Bonds in our individual names PLUS $10K each in the name of our respective trusts. A total of $40K in 2022.

We set up each trust following the information in the NOLO book "Make Your Own Living Trust" and got them notarized for $5 each.

 

[finnski1]

Yes, each spouse can have a separate trust with Treasury Direct which uses their respective social security. For example "Trust FBO Accidental Retiree" and "Trust Accidental Retiree Spouse".

My wife and I each purchased $10K in I-Bonds in Nov 2021 in our names only. A total of $20K in 2021.

In Jan 2022 we each purchased an additional $10K in I-Bonds in our individual names PLUS $10K each in the name of our respective trusts. A total of $40K in 2022.

We set up each trust following the information in the NOLO book "Make Your Own Living Trust" and got them notarized for $5 each.

Yes. Technically anyone with an LLC could do another $10k (or $20k if each had an LLC with cash in the business) as well. In theory a couple could purchase up to $60k this way although not practical for me and perhaps most on here. Then could even add in the $5k paper bond purchase with a $5k or greater tax refund.

So theoretically up to $65k/year is possible.
Think I'll do the trust thing but I dissolved my LLC years ago and I am not interested in juggling all that.

 

[pb4uski]

So e.g., "Trust FBO Accidental Retiree" ?

That sounds like something worth doing.

I wonder if each spouse can do that?

I think you could but to do it legitimately you would each have to have a trust set up that can be the owner of the ibonds... if you or your spouse already have trusts then you would be all set.

If you create trusts for this, perhaps one could name them "MonteCFO Trust to Sidestep ibond Purchase Limits" and "MonteCFO DW Trust to Sidestep ibond Purchase Limits".

I wonder if the beneficiary of the trust upon the grantor's death is the spouse if you could register the spouse (personally) as the beneficiary? You might also at some point need to provide Treasury Direct with a copy of the trust (I recall when we set up my Dad's trust accounts with Vanguard that we needed to provide them with a copy of the trust document).

I'm not sure what other complications that using trusts might create.

 

[Montecfo]

I think you could but to do it legitimately you would each have to have a trust set up that can be the owner of the ibonds... if you or your spouse already have trusts then you would be all set.

If you create trusts for this, perhaps one could name them "MonteCFO Trust to Sidestep ibond Purchase Limits" and "MonteCFO DW Trust to Sidestep ibond Purchase Limits".

I wonder if the beneficiary of the trust upon the grantor's death is the spouse if you could register the spouse (personally) as the beneficiary? You might also at some point need to provide Treasury Direct with a copy of the trust (I recall when we set up my Dad's trust accounts with Vanguard that we needed to provide them with a copy of the trust document).

I'm not sure what other complications that using trusts might create.

Well my thought was it is very simple to set up a revocable grantor trust under each spouse's TIN. Report the interest as yours and no 1041 required.

Yourself or spouse as beneficiary.

Forgive me of I do not adopt your trust naming convention.

I was thinking "Montecfo Trust to Better Finance National Debt" but mileage may vary, contents may have settled, objects closer than they appear, etc.

Perhaps still more trouble than it's worth