The I Bond Thread

[Gumby]

I found this article interesting: I Bonds: A not-so-simple buying guide for 2023

A very solid article. The twist for me (and for you as well, I believe) is that if I buy an I-bond this April, it will have to be as a gift that cannot be delivered until 2026, which will be a holding period of 33 months.

 

[calmloki]

We both bought back in November of 2021, then in January of 2022 and an extra $30k each to stick in our gift boxes in the April/May area of 2022. If interest rates on the savings bonds drop below what we can make elsewhere we will be selling and absorbing the three month penalty. Can only gift $10k/year to each other. I assume it is smartest to gift the May purchase first, as it is already earning less/ month than the April purchase.

Question is - is there a compelling reason to deliver the gift in January vs. a later month?

 

[Gumby]

We both bought back in November of 2021, then in January of 2022 and an extra $30k each to stick in our gift boxes in the April/May area of 2022. If interest rates on the savings bonds drop below what we can make elsewhere we will be selling and absorbing the three month penalty. Can only gift $10k/year to each other. I assume it is smartest to gift the May purchase first, as it is already earning less/ month than the April purchase.

Question is - is there a compelling reason to deliver the gift in January vs. a later month?

I did it on 1/3/23 just for convenience, but I suppose you could wait until the day or two before you want to redeem it.

 

[JoeWras]

Not joking here... I'm impressed that the Treasury Direct website handled all these early transactions that were made while it was a holiday. These all went into some pending queue.

I kind of feared some sort of mix up or crash. My transactions (about 35, cleaning out some junk) went through fine. I haven't heard a complaint anywhere.

The UI is a disaster, at least the back end handled all the stacked transactions OK. This is better than the live crash that happened when the TIPS deadline came close last Fall.

 

[misanman]

My apologies if this has been addressed prior, but what why would I choose a joint registration of POD (Owner and beneficiary) or a joint registration of "With" (Primary and Secondary)?

 

[foxfirev5]

I Bonds serve a purpose for me. I buy them every year. The only market timing I'm currently pursuing is TIPS. As long as the real yields are decent I'm rolling into them. On the other side of the coin I bought equities years ago and hopefully they'll hold up their end of the bargain. Investing is easy. The events in life can be hard.

 

[jim584672]

I was trying to change banks in TreasuryDirect, apparently this is a monumental undertaking. The site doesn't work, then it says you need a form and a signature from a bank officer. Went to the bank, bank says we don't do signature guarantees for this type of form. So I had them put a bank stamp on it and I will throw it against the wall and see if it sticks. It now says form received, wait 13 weeks before complaining. Uggh..

 

[Sunset]

My apologies if this has been addressed prior, but what why would I choose a joint registration of POD (Owner and beneficiary) or a joint registration of "With" (Primary and Secondary)?

We chose POD on ours, so all the i-bonds I own will POD to DW should I die. This way they go directly to her and not my estate, avoiding probate. Did the same for gifts, I bought gifts for DW and made myself the beneficiary. Gift get given immediately upon death (if I remember correctly, didn't want to test it )

We did it for the same reason we have POD on bank accounts and brokerage accounts.

We didn't do the Joint registration, as we each have our own Treasury Direct account and it seemed cleaner that way.

 

[Mulligan]

A very solid article. The twist for me (and for you as well, I believe) is that if I buy an I-bond this April, it will have to be as a gift that cannot be delivered until 2026, which will be a holding period of 33 months.

Interestingly, I have read at towards the bottom of comments section of this older article, people have recently commented they were able to buy the limit AND have all the gifts received to them in same year. One even said a TD rep said you could. Check out these comments in link below….Anyone feeling lucky? Actually they parsed the TD wording and it can be interpreted to do as such anyways….Someone want to provide comment on this?

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

 

[Gumby]

Interestingly, I have read at towards the bottom of comments section of this older article, people have recently commented they were able to buy the limit AND have all the gifts received to them in same year. One even said a TD rep said you could. Check out these comments in link below….Anyone feeling lucky? Actually they parsed the TD wording and it can be interpreted to do as such anyways….Someone want to provide comment on this?

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

Here is what Treasury Direct has to say about it:

https://www.treasurydirect.gov/savings-bonds/how-much-can-i-spend-own/

tldr - you can buy as many gifts as you want, but receipt of a gift counts against the recipient's $10k yearly limit.

I would believe the Treasury.

 

[Mulligan]

Here is what Treasury Direct has to say about it:



https://www.treasurydirect.gov/savings-bonds/how-much-can-i-spend-own/



tldr - you can buy as many gifts as you want, but receipt of a gift counts against the recipient's $10k yearly limit.



I would believe the treasury.

I take it you didnt go to comments section of the article as it broke down precisely all the regulations to come to their conclusion on why it could be done? It was most interesting.

 

[braumeister]

I was trying to change banks in TreasuryDirect, apparently this is a monumental undertaking. The site doesn't work, then it says you need a form and a signature from a bank officer. Went to the bank, bank says we don't do signature guarantees for this type of form. So I had them put a bank stamp on it and I will throw it against the wall and see if it sticks. It now says form received, wait 13 weeks before complaining. Uggh..

I wouldn't worry about it. I changed banks on my TD account last year, and it was simple. I printed out the form, took it to my local Chase branch for signature, and dropped it in the mail. A few weeks later it was changed online.

 

[jollystomper]

Interestingly, I have read at towards the bottom of comments section of this older article, people have recently commented they were able to buy the limit AND have all the gifts received to them in same year. One even said a TD rep said you could. Check out these comments in link below….Anyone feeling lucky? Actually they parsed the TD wording and it can be interpreted to do as such anyways….Someone want to provide comment on this?

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

I took a look (something to do while waiting for the wash cycle to complete ). It is a confusing comment thread. What it seems to me the main claim was that a recipient could receive more than $10K in gifted I-Bonds a in a given year. While $10K of the gift would count towards the recipients purchase limit - so that they could not on their own purchase anymore, receiving additional gifted I-Bonds above $10K would not cause their account a problem.

It was not clear to me if anyone in the thread had actually done that over a long period of time. I saw a few "I accidentally delivered $20K in gifts to a person a few days ago, so far nothing has happened, will something happen" comments. But nothing along the line of "yes, I did this in 2021 and 2022 and it has worked". So I do not feel lucky .

 

[Mulligan]

I took a look (something to do while waiting for the wash cycle to complete ). It is a confusing comment thread. What it seems to me the main claim was that a recipient could receive more than $10K in gifted I-Bonds a in a given year. While $10K of the gift would count towards the recipients purchase limit - so that they could not on their own purchase anymore, receiving additional gifted I-Bonds above $10K would not cause their account a problem.

It was not clear to me if anyone in the thread had actually done that over a long period of time. I saw a few "I accidentally delivered $20K in gifts to a person a few days ago, so far nothing has happened, will something happen" comments. But nothing along the line of "yes, I did this in 2021 and 2022 and it has worked". So I do not feel lucky .

Here was one, the main person who advocated and intentionally did it. The actual article writer “Finance Buff” actually thought it was possible to use if not flaunted on both ends. The breakdown parsing of the govt regs can be interpreted to why it will go through….
And the regs were parsed and discussed in some comments to support that….Or it just could be a computer quirk exploited being they are already titled under recipients name. I will follow thread and see if anymore attempt it.
Dunmovin says
JANUARY 2, 2023 AT 7:02 PM
And the down side is? Who has delivered more than $10 K from gift box any one year to one person? No one? Therefore the proof is in the pudding …all theory but no practical answer?

M. Anderson says
JANUARY 2, 2023 AT 8:31 PM
I did. I had purchased a $10k I-bond three years in a row for a child, and delivered them all to the recipient in a single year when that person turned 18.

 

[braumeister]

Just one potential hitch.
Last year DW got a bit mixed up on the TD site (hardly a surprise there) and accidentally bought two for $10K each in March. They caught the error right away, but we didn't get the $10K back until November. So that money was tied up in limbo for about eight months. They paid a little interest on it, but you might have to deal with the inconvenience of it all.

 

[pb4uski]

Here was one, the main person who advocated and intentionally did it. The actual article writer “Finance Buff” actually thought it was possible to use if not flaunted on both ends. The breakdown parsing of the govt regs can be interpreted to why it will go through….
And the regs were parsed and discussed in some comments to support that….Or it just could be a computer quirk exploited being they are already titled under recipients name. I will follow thread and see if anymore attempt it.
Dunmovin says
JANUARY 2, 2023 AT 7:02 PM
And the down side is? Who has delivered more than $10 K from gift box any one year to one person? No one? Therefore the proof is in the pudding …all theory but no practical answer?

M. Anderson says
JANUARY 2, 2023 AT 8:31 PM
I did. I had purchased a $10k I-bond three years in a row for a child, and delivered them all to the recipient in a single year when that person turned 18.

I wonder if their system can see that from the year when the gift was bought to the year that it was delivered that the recipient has not used their full $10k annual allowance in some of those years and thereforre allows more than $10k of gifts to be delivered in a single year those cases?

But if the recipient has used up their annual allowances from the year the gift was bought to the year delivered then the system prohibits delivery of the gift.

That would make sense, but I'm not sure if the system is that smart.

 

[Gumby]

I take it you didnt go to comments section of the article as it broke down precisely all the regulations to come to their conclusion on why it could be done? It was most interesting.

I did read it. I think M. Anderson is wrong in his interpretation of the regulations. He may have done what he says, but that may catch up to him at some time.

And here is why. The regulation reads.

§ 363.52 What is the principal amount of book-entry Series EE and Series I savings bonds that I may acquire in one year?

(a) The principal amount of book-entry savings bonds that you may acquire in any calendar year is limited to $10,000 for Series EE savings bonds and $10,000 for Series I savings bonds.

(b) Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient.

(c) Bonds purchased as gifts or in a fiduciary capacity are not included in the computation for the purchaser. Bonds received due to the death of the registered owner are not included in the computation for the recipient.

(d) We reserve the right to take any action we deem necessary to adjust the excess, including the right to remove the excess bonds from your TreasuryDirect account and refund the payment price to your bank account of record using the ACH method of payment.

Note that the $10k limitation in subsection (a) uses the word "acquire". M Anderson argues that "acquire" means only "purchase". However, the very next subsection says that bonds "purchased" or "transferred as gifts" count against the limitation in (a). It is a rule of statutory construction that one should read the statute as a whole and adopt the interpretation that gives meaning to each part. That is, none of the language is superfluous. If Anderson is correct that the limitation in subsection (a) is only on purchases, there would be no need for subsection (b), which makes clear that it is purchases OR transfers as gifts that count toward the limit. It is clear that the drafters understood there is a distinction between "purchase" and "acquire".

M. Anderson appears to argue that, because 363.26 states that a "transfer" is not a gift delivery, then "transferred as gifts" does not impact the purchase limit. If "transfers" already excludes "gifts" due to 363.26, then the phrase "transferred as gifts" is contradictory and absurdly meaningless. Another axiom of statutory construction is that one does not interpret the statue to produce absurd results. It seems clear to me from the wording that 363.63(b) deliberately intends to capture "gifts" within the $10k limit of subsection (a).

The drafting is not perfect, but I think a court would agree with me.

 

[Mulligan]

I did read it. I think M. Anderson is wrong in his interpretation of the regulations. He may have done what he says. but that may catch up to him at some time.

Gumby did you see this one also?

Dunmovin says
JANUARY 5, 2023 AT 2:33 PM
My spouse and I have gifted to the other several $10K amounts to each over the years. Nothing this year and no activity on accounts until today. …Testing the TD system my spouse “delivered” to me $5K…it went through and I saw in my TD account……But then I asked if I could then buy $10K for my TD account and the answer was “yes,” therefore it “seems” that one “could” have more than $10K delivered to the same person in same year!!! Go figure?

I definitely think there is a specific intent of the rules. No question…I doubt they intentionally limit $10k yearly purchase just so you and spouse can gift each other 100k and receive in bulk next year to work around the rule they set up. IBonds and EE bonds were set up for “small investors” such being the cut the limits drastically many years ago and said with that intent.
But what the policy states, its interpretation, the TD reps, and the computer system design definitely are not all in sync it appears.

 

[pb4uski]

Gumby did you see this one also?

Dunmovin says
JANUARY 5, 2023 AT 2:33 PM
My spouse and I have gifted to the other several $10K amounts to each over the years. Nothing this year and no activity on accounts until today. …Testing the TD system my spouse “delivered” to me $5K…it went through and I saw in my TD account……But then I asked if I could then buy $10K for my TD account and the answer was “yes,” therefore it “seems” that one “could” have more than $10K delivered to the same person in same year!!! Go figure?

I definitely think there is a specific intent of the rules. No question…I doubt they intentionally limit $10k yearly purchase just so you and spouse can gift each other 100k and receive in bulk next year to work around the rule they set up. IBonds and EE bonds were set up for “small investors” such being the cut the limits drastically many years ago and said with that intent.
But what the policy states, its interpretation, the TD reps, and the computer system design definitely are not all in sync it appears.

But I wonder if Dunmovin had actually bought $10k that TD would subsequently tell him that he exceeded his allowance and return the overage to him... from what I read that happens frequently.

 

[Gumby]

I would also add that just because someone occasionally gets away with violating federal regulations does not invalidate the regulations. In other words, the fact that some murderers never get caught does not make murder legal.

 

[Mulligan]

I would also add that just because someone occasionally gets away with violating federal regulations does not invalidate the regulations. In other words, the fact that some murderers never get caught does not make murder legal.

Im not in disagreement as it certainly at a minimum violates the spirit if not intent of the regulations.
Just to light hearted tease you a bit, the murder analogy is a little tough though. Many people overbought IBond limits and were just told not to do it again and allowed the over deposit to stay permanently in account. I doubt the local sheriff would say we will let this murder go by this time just dont do it again.
On more important matters here is a decent update projection article from this week if you havent seen it yet.

https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/

 

[JoeWras]

We have to remember that the Treasury Direct web interface and back end are ancient. People expect that an overpurchase would be rebuffed if it were not allowed.

Not so. Just because "Dunmovin" gave it a "test" that "seemed" to work doesn't mean squat.

As pb4uski mentions, we've seen many people share here and elsewhere iBond purchases that were reversed ... eventually. This probably is caught when they run that once a quarter COBOL job (I am not joking).

For me: I find Treasury Direct so fragile and ancient that I don't want to start removing bricks from the foundation to see if it crumbles on me. It is not worth the trouble of dealing with this understaffed and now over-subscribed agency. Years of useless interest rates allowed them to skate along. Now that we have real rates again, people are back and are stressing the system. I'd rather not fall into a stress crack.

 

[Mulligan]

We have to remember that the Treasury Direct web interface and back end are ancient. People expect that an overpurchase would be rebuffed if it were not allowed.

Not so. Just because "Dunmovin" gave it a "test" that "seemed" to work doesn't mean squat.

As pb4uski mentions, we've seen many people share here and elsewhere iBond purchases that were reversed ... eventually. This probably is caught when they run that once a quarter COBOL job (I am not joking).

For me: I find Treasury Direct so fragile and ancient that I don't want to start removing bricks from the foundation to see if it crumbles on me. It is not worth the trouble of dealing with this understaffed and now over-subscribed agency. Years of useless interest rates allowed them to skate along. Now that we have real rates again, people are back and are stressing the system. I'd rather not fall into a stress crack.

It seems like policy, technological system implementation, and TD reps are not aligned. Interestingly here was a post today from the previous linked article.
Martin Anderson says
JANUARY 12, 2022 AT 2:27 PM
Here’s the official response I received from Treasury to my email asking whether the date of purchase or date of gift box delivery controls the application of $10,000 limits:
————————————–
Hi Martin,

The purchase limit is per year. It will not matter if you deliver both bonds to the gift recipient in the same year. As you stated, they were purchased in different years. There will be no issues with the limits.

…. I have gifted in separate years and have no reason yet to tempt fate yet. But 2024, may be different. I still will be in acquiring mode this year.

 

[Gumby]

Appears to be a post from a year ago, not today. Also, you should read the reply immediately below it. His factual situation is different from what we have been discussing.

 

[Mulligan]

Appears to be a post from a year ago, not today. Also, you should read the reply immediately below it. His factual situation is different from what we have been discussing.

Ha, yes, thanks Gumby. I was first wondering what you meant as I was looking at the latest posts. I dont know how I wound up back there. But I clearly did as I had the stamped posted date 1/22 with it. Im going to keep periodically following comments to see if anyone updates any more info. Not so much the 1/22 posts….I hope anyways….Keep an eye out in case I do please!