The I Bond Thread

BlueberryPie said:
Can you cash out (transfer tot the bank) any unused amount? For example if you sell the "entire iBond" you bought in 2021 you may end up with $11250 (making it up). So can you repurchase $10K and then transfer the remaining $1250 to your bank account?
Or maybe you sell $10K from the initial iBond, leave the remaining $1250 to keep growing without penalty, etc ..?
Click to expand...

The answer to your first question is absolutely yes. Any funds not allocated to Treasuries or Savings Bonds are in a section called "C of I", or Certificate of Indebtedness. Those funds can be added to from your bank account, or taken out and put into your bank account. Since you have to set up a link to your bank account when you start a Treasury Direct account, the movement between the two is simple.

As for your second question about leaving it in the C of I account, sure, you can leave it there, but it accrues no interest. It's the government after all. So I wouldn't leave any large amount there unless you intend to deploy it in the near term to Treasuries or bonds.
 
If you want to claim interest every year, do you have to do that from year one? I’m in year two and would like to start claiming each year’s interest. Wondering if it’s too late or if I can just do a catchup for the first two years.
 
From what I’ve been reading here, if you want to switch to yearly, you pay what you owe from the beginning that first year, and yearly thereafter.

The mechanics of it - someone else will have to explain.
 
audreyh1 said:
From what I’ve been reading here, if you want to switch to yearly, you pay what you owe from the beginning that first year, and yearly thereafter.

The mechanics of it - someone else will have to explain.
Click to expand...

The TreasuryDirect does explain it so folks can confirm.

https://treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/#id-when-must-i-report-the-interest--977832

It does mean that the first year of interest claimed is higher as it includes previously earned interest, and has to be done for all bonds owned by the SSN.

The amount of interest is not so easily provided.
I have realized the easiest way to know how much interest the various i-bonds paid is to look at the bonds value a few days into January.
No calculations needed.

The calculator they provide for paper bonds does work for electronic ones, but have to use the value of $5K (and multiply if bond is 10K).

This tax year, I get to see what is required to tell the IRS I paid some tax already on the i-bonds I cashed, so the statement provided by TreasuryDirect won't match...
 
Last edited:
Right - important point - all Ibonds.

I’ll probably use a partial redemption strategy to manage our taxable income year by year as each bond gets close to maturity ( or my ability to deal with them).
 
ychuck46 said:
The answer to your first question is absolutely yes. Any funds not allocated to Treasuries or Savings Bonds are in a section called "C of I", or Certificate of Indebtedness. Those funds can be added to from your bank account, or taken out and put into your bank account. Since you have to set up a link to your bank account when you start a Treasury Direct account, the movement between the two is simple.

As for your second question about leaving it in the C of I account, sure, you can leave it there, but it accrues no interest. It's the government after all. So I wouldn't leave any large amount there unless you intend to deploy it in the near term to Treasuries or bonds.
Click to expand...

I didn't mean leave the balance in the C of I. What I meant is that if you invested $10K in a purchase, you don't have to take the entire $10K+interest. You could cash out $10K and leave the remaining $1250 as an iBond. The $29Knwould still be considered principal+interest so you'd still have to pay taxes on it, but the remaining $1250 continues to grow with inflation.

Mostly in my theoretical example, it's easy to cash out the full $11250, buy a fresh $10K at the 1.9% fixed rate, then consider the remaining $1250 as found money to be blown on the next iPhone or whatever, effectively wiping any benefit of having held the money in iBonds to start with.
So either leave the $1250 iBond balance remaining in the iBond, or if you can it, put some aside to pay the tax on $1250 and reinvest the rest in your IRA or brokerage or...

In my case I will leave the $1250 iBonds sine they are part of my inflation adjusted emergency fund. If I needs that $10K in my account in 2020, then I need the full $11250 in 2023, even if it's slip between and 0% and a 1% fixed rate
 
Just thinking here.

If a person has some i-bonds, and to simplify I'm going to use fake numbers, each bought with $10K. Interest was never claimed.

I-bond #1 now: $12,500
I-bond #2 now: $14,000
I-bond #3 now: $16,500

I'm thinking the person could withdraw $10K from each I-bond and not pay tax as it's just the principle.
The remaining all interest portions would grow much slower due to less invested and be fully taxable when withdrawn.

Anyone know if this is true or not ?
 
Sunset said:
Just thinking here.

If a person has some i-bonds, and to simplify I'm going to use fake numbers, each bought with $10K. Interest was never claimed.

I-bond #1 now: $12,500
I-bond #2 now: $14,000
I-bond #3 now: $16,500

I'm thinking the person could withdraw $10K from each I-bond and not pay tax as it's just the principle.
The remaining all interest portions would grow much slower due to less invested and be fully taxable when withdrawn.

Anyone know if this is true or not ?
Click to expand...

False.

What you redeem includes some interest. It’s pro-rated, not principal first.
 
It is the downside of I-bonds and why they are a good deal for the government. They keep up with inflation (somewhat, maybe not medical inflation) but you get taxed on that increase, so you never have the buying power of the original money. Better to just buy 10 years of toilet paper :D
 
Fermion said:
It is the downside of I-bonds and why they are a good deal for the government. They keep up with inflation (somewhat, maybe not medical inflation) but you get taxed on that increase, so you never have the buying power of the original money. Better to just buy 10 years of toilet paper :D
Click to expand...

I think your leaving out the fixed rate on top of the inflation rate. And the cost of storing 10 years worth of toilet paper. :D
 
Having to pay federal (but not state) on interest does reduce the ability to keep up with inflation somewhat, but it's still probably the best deal for liquid inflation adjusted instruments. TIPS ave higher yields but only if you keep them till maturity. If you sell early you may have a loss. IBonds are not perfect but way better than toilet paper. Even CDs, etc .... have no guarantee to keep up with inflation and CDs interest is taxable both by Fed and state.

The fixed interest rate will help and that's why I'll be exchanging some of my 0% bonds inside my emergency fund. Just need to be aware they're not liquid for a year so don't tie up the whole emergency fund at once
 
Last edited:
The CPI for December 2023 was just released. It was 306.746. September 2023 was 307.789. So half the next inflation adjustment is baked in.

The formula for the adjustment is ((CPI Mar/CPI Sep) -1) x 200. So, if the CPI remains unchanged through March, the inflation adjustment will be -.67% APR. If CPI continues to drop, the negative adjustment will be more. That would mean any I-bond purchased between 01 May 2009 and 30 April 2023 would pay a composite rate of 0% for six months after its next rate reset.
 
Last edited:
pb4uski said:
^^^ That makes me feel better about my recent decision to redeem all that I could.
Click to expand...

Agree. Haven’t done it yet, but it’s on my to do list.
 
I am about to convert and sell the last of my i-bonds which are in paper. After a timely 13 weeks or so, the government should be able to type in the 10 digits and convert them to electronic so I can sell them.
 
Those $5,000 I-bond bought via income tax returns. Can they be cashed at a bank or is it the mail in routine ?

Since ours was bought recently, I'm sure it's one in danger of earning 0%.
 
Sunset said:
Those $5,000 I-bond bought via income tax returns. Can they be cashed at a bank or is it the mail in routine ?

Since ours was bought recently, I'm sure it's one in danger of earning 0%.
Click to expand...

If it was issued between November 1, 2022, and April 30, 2023, it has a 0.4% fixed interest rate. If issued May 1 and October 30 2023, it has a 0.9 % fixed interest rate. If issued after November 1, 2023, it has a 1.3 % fixed interest rate. The variable rate, if negative, is subtracted from that but cannot bring the composite rate below 0%. As things currently stand, the first of this group would go to 0%, but the latter two would be positive.

Many banks will not redeem I-bonds; you should ask your bank. Here are the instructions for doing so through the Treasury:

https://www.treasurydirect.gov/savings-bonds/cashing-a-bond/#id-paper-ee-or-i-savings-bonds-447549
 
Gumby said:
The CPI for December 2023 was just released. It was 306.746. September 2023 was 307.789. So half the next inflation adjustment is baked in.

The formula for the adjustment is ((CPI Mar/CPI Sep) -1) x 200. So, if the CPI remains unchanged through March, the inflation adjustment will be -.67% APR. If CPI continues to drop, the negative adjustment will be more. That would mean any I-bond purchased between 01 May 2009 and 30 April 2023 would pay a composite rate of 0% for six months after its next rate reset.
Click to expand...

Then I am incorrect in thinking that the IBonds I purchased in March ‘22 and April ‘22 — now at 3.38%— will reset in those months in 2024 to the current rate of 3.94% and remain at that point for 6 months?

I thought I understood the rate changes, but it sounds like I am missing something, and I’d appreciate clarification.
 
Accidental Retiree said:
Then I am incorrect in thinking that the IBonds I purchased in March ‘22 and April ‘22 — now at 3.38%— will reset in those months in 2024 to the current rate of 3.94% and remain at that point for 6 months?

I thought I understood the rate changes, but it sounds like I am missing something, and I’d appreciate clarification.
Click to expand...

you are correct. a Series I bond bought in March 2022 will be making 3.38% until Feb 2024, then starting March 2024 will make 3.94% until Aug 2024, then will switch to the new rate (to be announced May 2024) in September 2024
 
Last edited:
You must log in or register to reply here.

Similar threads

R
New I Bond rate effective May 1
Replies
2
Views
475
Koolau
Koolau
walkinwood
What to do with those 0% Fixed-rate I-Bonds?
2
Replies
49
Views
6K
SALTedOut
S
I
I Bonds...splitting the difference.
Replies
8
Views
1K
BlueberryPie
BlueberryPie
VanWinkle
"Comfort has a Cost"
2
Replies
49
Views
5K
audreyh1
audreyh1
T
What FI % Should Be In Short-Term Instruments?
Replies
20
Views
2K
OldShooter
OldShooter

Latest posts

Back
Top Bottom