The I Bond Thread

[sengsational]

For those of you who are getting rid of all your ibonds - are you still keeping the TD account itself open? Or closing out the account as well?

I didn't see a big reason to close it, so didn't.

 

[Accidental Retiree]

I won't do the tax refund purchase method again. Dealing with all of those small denomination bonds (didn't they come in individual mail envelopes?), mailing them in, waiting to see if they showed up in my account, and they redeeming them one at a time was more work than it was worth. Though the TD site was lighting quick for redemption for me.

If another opportunity like we just had for purchasing comes again, I'll consider $10K purchases.

I guess we got lucky. We got one $5000 bond.

 

[euro]

I guess we got lucky. We got one $5000 bond.

Nothing to do with luck - if your are eligible for $5000 refund and requested it all in the form of i-bond, then you will always get one $5000 bond.

I suppose that if you have an odd amount of refund and request all of it in iBonds, then they will piece together whatever they can to come as close as possible. But you do have the option to indicate on the tax return how much you want in the form of iBonds and how much as a check or direct deposit., So, if you have $2034 in refund, you can ask for $2000 in iBonds and for the rest get a check. Then you will get a $2000 bond, or if that doesn't exist, 2x $1000 bonds.

 

[Gumby]

what are you guys selling your 0%-fixed iBonds putting the money in instead?

For me, regular Treasuries on the secondary market.

 

[RunningBum]

Nothing to do with luck - if your are eligible for $5000 refund and requested it all in the form of i-bond, then you will always get one $5000 bond.

I suppose that if you have an odd amount of refund and request all of it in iBonds, then they will piece together whatever they can to come as close as possible. But you do have the option to indicate on the tax return how much you want in the form of iBonds and how much as a check or direct deposit., So, if you have $2034 in refund, you can ask for $2000 in iBonds and for the rest get a check. Then you will get a $2000 bond, or if that doesn't exist, 2x $1000 bonds.

I had a $5000 refund. I'm certain of that. I figured they did it this way so you could redeem any value in a multiple of $25.

 

[Gumby]

I had a $5000 refund. I'm certain of that. I figured they did it this way so you could redeem any value in a multiple of $25.

$25 is the base denomination of I-bonds. So when they calculate interest, they calculate it for the $25 bond and round to the penny. Then, if you have $10k, for example, they multiply by 400. That's why monthly interest on $10k of I-bonds can vary a few dollars from month to month.

 

[RunningBum]

what are you guys selling your 0%-fixed iBonds putting the money in instead?

T Bills, CDs and/or MM. Basically it's thrown into my cash pile and money I won't need for a few months gets put in something longer term. I have a cash plan mapped out for my expenses to take me to age 70 (probable start of SS).

 

[Jerry1]

what are you guys selling your 0%-fixed iBonds putting the money in instead?

I’m going to buy some 1 year CD’s.

 

[finvest2]

The only thing is I doubt we see the 1.3% fixed rate again for a long time.

The last time the fixed rate was 1% or higher was early 2008.

I’m buying our annual allotment later this month.

There's a 13 week Treasury bill auction on Tuesday (912796CX5). It matures 4/18. It has pretty good timing to invest in the Treasury note auction, collect 5+% for a few months, then see where things are before the ibond rate resets on 4/30. In all likelihood all the money I'm putting into the Treasury bills will go directly into ibonds, unless by some miracle it looks like the fixed rate could rise.

 

[tulak]

what are you guys selling your 0%-fixed iBonds putting the money in instead?

I've been buying 10-year TIPS.

My situation might be different, in that fixed income for me is to deal with SORR once I retire.

 

[audreyh1]

I just got notified by Treasury Direct that my 2023 1099-INT is available online.

 

[bobbyr]

for 2025 gifts, can you redeem and sell them now? or not until next January?

 

[BlueberryPie]

The TIPS fixed is getting hard to ignore compared to IBonds. A 10/27 TIPS I bought this week had a fixed of over 2.2%. Well above the IBond fixed.

Depending on want you use iBonds for, it's apple and oranges. iBonds are guaranteed to return XX after the first year (and YY after the 5th year) but can be liquidated at any time after the first year and you get exactly what it says on the can.

TIPS are guaranteed to return ZZ 5/10/25 years from the purchase date. You can sell them any day between now and then, but you may make or lose money, the only guarantee is if you hold them to maturity in 5, 10, 25 years.

so TIPS are great to fund, say your social security bridge in 10 years, and iBonds are great for your emergency fund you could need any day, once you work past the first year

 

[Finance Dave]

Depending on want you use iBonds for, it's apple and oranges. iBonds are guaranteed to return XX after the first year (and YY after the 5th year) but can be liquidated at any time after the first year and you get exactly what it says on the can.

TIPS are guaranteed to return ZZ 5/10/25 years from the purchase date. You can sell them any day between now and then, but you may make or lose money, the only guarantee is if you hold them to maturity in 5, 10, 25 years.

so TIPS are great to fund, say your social security bridge in 10 years, and iBonds are great for your emergency fund you could need any day, once you work past the first year

I like this way of looking at it.

 

[scrinch]

Seeing this thread just jolted me awake about our I-bonds. We have 6x$10k bonds from the dotcom era that will mature in another 6+ years, just about when I will have to start taking RMDs from my IRA and start taking SS payments. I'm thinking that we should probably redeem the bonds over several years before they all mature at once in order to avoid having a lump of 30 years of interest to pay taxes on all in one year.

Saving and deferring taxes seemed like a wise thing to do for all those working years, but now that the taxes are coming due and we're still in a highish bracket, it seems less so. First world problem, I guess.

 

[pb4uski]

for 2025 gifts, can you redeem and sell them now? or not until next January?

I'll give you three guesses and the first two don't count.

 

[friar1610]

Seeing this thread just jolted me awake about our I-bonds. We have 6x$10k bonds from the dotcom era that will mature in another 6+ years, just about when I will have to start taking RMDs from my IRA and start taking SS payments. I'm thinking that we should probably redeem the bonds over several years before they all mature at once in order to avoid having a lump of 30 years of interest to pay taxes on all in one year.

Saving and deferring taxes seemed like a wise thing to do for all those working years, but now that the taxes are coming due and we're still in a highish bracket, it seems less so. First world problem, I guess.

This is precisely the situation I’m in although I’m older than you. Agree it’s a first world problem and I’m lucky to have have such great appreciation, but it still doesn’t make me eager to pay taxes. All of mine (12, if I recall) are $5000 face value and are now worth $19-$20K each. I’m going to start this year by redeeming 1 or 2 and using the proceeds as a pre-payment on a legacy scholarship pledge I made to my alma mater. That will give me a nice deduction but will still increase my MAGI to the point that I won’t be able to make any 2024 Roth conversions without involving dear old Aunt IRMAA. I hope I can get them all redeemed before either I or my wife dies as MFS will only exacerbate the problem. At 78/77 we likely won’t be having any more kids so the education deduction won’t work either.

 

[scrinch]

Could you give the bond to your alma mater without cashing it in...like you can give pre-tax gifts from your IRA?

 

[friar1610]

Could you give the bond to your alma mater without cashing it in...like you can give pre-tax gifts from your IRA?

My understanding is that while you are living, you must redeem the I-Bonds, donate the proceeds to the charity and then take a deduction on your taxes. You can leave them to a charity in your will and then the bonds go directly to the charity. But I’m not yet ready to go that route.

If my understanding is not correct, I would appreciate hearing the details.

 

[bobbyr]

I'll give you three guesses and the first two don't count.

I know, I felt stupid asking

 

[pb4uski]

I know, I felt stupid asking

I've actually thought of doing it because that is all we have left with Treasury Direct... his and her gifts to each other that I'll deliver and redeem on Jan 1, 2025... but I was told by some other posters that Treasury Direct would catch up on it at some point and claw the money back and reverse everything.

I guess that I could do it and then close the bank account that is linked to Treasury Direct so the clawback would fail but I'm not that desparate to be rid of Treasury Direct.

 

[jollystomper]

I just got notified by Treasury Direct that my 2023 1099-INT is available online.

Thanks for the heads up! I did not get a notification, but I signed on to check and mine is there.

 

[FloridaWizard]

I just got notified by Treasury Direct that my 2023 1099-INT is available online.

Will there be a hardcopy mailing as well? My wife passed away last year and Treasury Direct won't let me access her account.

 

[audreyh1]

Will there be a hardcopy mailing as well? My wife passed away last year and Treasury Direct won't let me access her account.

No, they don’t mail hard copy. You will have to contact them about your wife passing and needing her 1099. Sorry for your loss.

 

[Exit 2024]

Last 3 months of the year are often have negative CPI-U change, it almost always gets offset and more by first 3 months of the next year for the I-Bond calculation.
I do not see it being different this time.

Following up on discussion about negative/zero inflation rate starting in May, we already in the positive territory with January non-seasonally adjusted inflation of +0.54%, and 4 months overall at +0.2%, both are expected and my prediction that total six months inflation component will be close to 1.2-1.5% and Treasury again will offer non-zero fixed rate for next 6 months.