The I Bond Thread

[pb4uski]

I jettisoned Treasury Direct earlier this year. It is too archaic for my tastes. Luckily, I haven't had any problems accessing my accounts. Besides, in my brokerage account I can easily sell a Treasury that I own before maturity if I need to... you can do that with Treasury Direct... you need to eith wait for maturity or initiate a request for them to transfer your Treasury to a brokerage account to then sell it. Not worth the hassle.

 

[Gumby]

Looks like this October might be the time to load up on some I-Bonds. Current fixed rate is 1.30% until 10/31. Inflation adjustment is likely to be right around 2%. I suspect the fixed rate will drop in November along with the rest of the short term treasuries.

Based on the BLS release today, the inflation adjustment starting November 1 will be 1.90%. So, if you buy this month, you get 6 months at 3.2% APR. For comparison, this morning 6 month Treasuries are at 4.46% and 1 year Treasuries are at 4.23%

 

[Chuckanut]

It’s official. 1.2% is the new fixed rate starting in December.

Apparently, the news release is not complete. Tips Watch seems to think there might be more news on gifting and the Ibond purchase amount.

 

[Gumby]

I recently got an email from Treasury Direct encouraging me to deliver my gift bonds (purchased April 2022), but I already delivered gift bonds in January of this year. So maybe there will be some clarification about the $10k per year limit that we have debated here.

 

[Mulligan]

I recently got an email from Treasury Direct encouraging me to deliver my gift bonds (purchased April 2022), but I already delivered gift bonds in January of this year. So maybe there will be some clarification about the $10k per year limit that we have debated here.

Probably not for same reason, but TD is advocating doing what I have done for a year now. Having a few friends purchasing gift IBonds for me, then sending on to me shortly thereafter. After of course I had made my annual purchase. I need one more go around come January, then I will have my set goal of 1.3%-1.2% fixed component met.

 

[pb4uski]

I recently got an email from Treasury Direct encouraging me to deliver my gift bonds (purchased April 2022), but I already delivered gift bonds in January of this year. So maybe there will be some clarification about the $10k per year limit that we have debated here.

Yes, my aunt received the same email and I suggested that she gi andtually redeem the remaining $10k of ibonds that we planned to do in 2025.

I "cheated" and did our remaining for myself and DW earlier this year. I drained the bank account that was connected to TD in case they figured it out and tried to claw back the money. Nothing from TD on that.

Actually, I'm relieved to be out of TD. It is to clunky and archaic for my taste and I like the flexibility of being able to buy/sell at will. I don't see the attraction of ibonds given that I can buy TIPS to get inflation protection and this is all in a tax-sheltered account so the deferral of interest income is an issue in my case.

 

[simple girl]

I recently got an email from Treasury Direct encouraging me to deliver my gift bonds (purchased April 2022), but I already delivered gift bonds in January of this year. So maybe there will be some clarification about the $10k per year limit that we have debated here.

I just received the same email today, too. I have also been waiting to gift because of already gifting bonds this year. Interesting.

 

[Mulligan]

Yes, my aunt received the same email and I suggested that she gi andtually redeem the remaining $10k of ibonds that we planned to do in 2025.

I "cheated" and did our remaining for myself and DW earlier this year. I drained the bank account that was connected to TD in case they figured it out and tried to claw back the money. Nothing from TD on that.

Actually, I'm relieved to be out of TD. It is to clunky and archaic for my taste and I like the flexibility of being able to buy/sell at will. I don't see the attraction of ibonds given that I can buy TIPS to get inflation protection and this is all in a tax-sheltered account so the deferral of interest income is an issue in my case.

Ha, PB, you certainly went the extra mile! I never had a concern of any clawback. Their own policies stated gifts received counted toward annual purchase limit, but they never stated anywhere purchased amounts counted against an annual limit of gifts received. In fact an annual limit amount of gifts received was never mentioned anywhere. I have read TD reps are now flat out telling people to dump out all the gifts in mass now.
Im phasing my lady out of TD once her treasuries mature next year. Im keeping for the IBonds. I really cant compare TIPS to IBonds for my personal needs because TIPS cannot do what IBonds will for me.

 

[slaternuthink]

There is some active chatter over at bogleheads regarding the TD emails and the intention to close the gift bond loophole where people load up when rates are favorable.
Apparently, they want the gift box cleared out by 1/1/25 and possibly will restrict future purchases by the number of years equal to number of excess gifts purchased.
Also, Tipswatch has a post on other possible changes coming next year including higher annual purchase limits.
Links -

Treasury Direct e-mail: undelivered gift bonds - Page 5 - Bogleheads.org

It’s going to be a big week for I Bonds

Oct. 31 update: Treasury sets I Bond’s fixed rate at 1.20%, composite rate falls to 3.11% By David Enna, Tipswatch.com By Thursday (or possibly Friday) we are going to get a lot of new information …

tipswatch.com

 

[steelyman]

Good to see this. I’ll be redeeming 2 I Bonds with 0.1% and 0.5% fixed rates. Proceeds will be invested right back in (and tax on interest paid).

 

[audreyh1]

Interesting stuff! I never participated in the IBond gifting stuff. Too complicated for me and I already had more than enough IBonds that I didn’t need to arrange purchasing more.

What I did do over the last few years is redeem my lowest yielding IBonds and double up on the 1.30% fixed rate since it was offered over a period that included a year change.

I don’t know how I feel about them finally increasing the annual purchase limits. Way back when I was pretty bummed when they were reduced so much. Now I’m really “full” IBond wise so it won’t be an incentive for me. I’m focused now on how to gracefully redeem after several more years to reduce the annual tax hit.

I really enjoy the TIPSwatch blog and I’m glad he covers IBonds and interest rates too. He made TIPS (almost) understandable to me and I got brave enough to purchase a couple of 5-year TIPS in our IRAs when real rates were at historic highs (20 years at least) and actually understand what it was that I bought, ha ha. So many details! They are so complex. Even the TIPSwatch blogger had to correct himself with a follow up post after thinking one of the auctions had been mispriced.

 

[Al18]

There’s no increase in purchase limits. It’s been $10K per year per person, with a maximum of $5K in paper bonds as part of your tax return. They are doing away with the $5K paper bond next year.

 

[audreyh1]

There’s no increase in purchase limits. It’s been $10K per year per person, with a maximum of $5K in paper bonds as part of your tax return. They are doing away with the $5K paper bond next year.

The TIPSwatch post above speculates that

Here is what I suspect (or maybe it is just my wishful thinking): The Treasury will scale back or eliminate the gift-box program, while at the same time raising the savings bond annual purchase limit to $20,000 or even $30,000.

only with 35% certainty.

 

[Chuckanut]

The only advantage for me of Ibonds over TIPS is that if I have to sell in an emergency situation, I can be sure my Ibonds have not lost money. TIPS can and do go down during their lifetime. However, if one has an amole emergency cash stash, that may not be an issue.

I would like to see the yearly purchase limit boosted at least by the inflation rate. They could do it every few years rounding up or down to the next thousand’s place. I am getting a bit tired of governments using inflation to invisibly raise taxes and fees using fixed limits, and also reduce certain benefits to the citizens. But, that is a subject for another thread.

 

[Al18]

I would like to see the limit raised also. If they are going to remove the ability to buy a paper iBond with your tax refund, they should bump up the digital iBond limit the same amount.

 

[Mulligan]

The only advantage for me of Ibonds over TIPS is that if I have to sell in an emergency situation, I can be sure my Ibonds have not lost money. TIPS can and do go down during their lifetime. However, if one has an amole emergency cash stash, that may not be an issue.

I would like to see the yearly purchase limit boosted at least by the inflation rate. They could do it every few years rounding up or down to the next thousand’s place. I am getting a bit tired of governments using inflation to invisibly raise taxes and fees using fixed limits, and also reduce certain benefits to the citizens. But, that is a subject for another thread.

Chuck, that is basically my reason. I dont really consider TIPs and IBonds to be comparible. IBonds arent really bonds, basically a mid to longer duration cash instrument and not truly a bond. I also like the cash deferral feature too. They arent my first line of defense for emergency or unexpected cash needs, but they would be the second or third line if needed.

 

[steelyman]

I redeemed another I Bond that had a 0.1% fixed rate and reinvested in a new one.

Slow going to replace those bonds but I think worth it.

 

[mrfeh]

I redeemed another I Bond that had a 0.1% fixed rate and reinvested in a new one.

Slow going to replace those bonds but I think worth it.

For those of you willing to take the tax hit, it appears you can redeem all of your low fixed rate I Bonds and get the current rate if you have somebody to play the gift game with:

Treasury Direct e-mail: undelivered gift bonds - Bogleheads.org

 

[Gumby]

We redeemed the last $20k of our I-bonds today. They were purchased in April 2022. In accordance with the email from Treasury Direct, we delivered them as gifts to each other last month. If they bar us from new purchases this year, it is no less than I expected when I first bought them.

 

[aja8888]

Does TD send out 1099's since I sold all mine last year?

 

[Gumby]

Does TD send out 1099's since I sold all mine last year?

You have to go online at Treasury Direct and fetch them for yourself. I did it on 1/22/24 (for tax year 2023 redemptions) and they were ready.


Edit to add: Here's the link 1099 — TreasuryDirect

 

[aja8888]

You have to go online at Treasury Direct and fetch them for yourself. I did it on 1/22/24 (for tax year 2023 redemptions) and they were ready.

Thanks!

 

[beowulf]

You have to go online at Treasury Direct and fetch them for yourself. I did it on 1/22/24 (for tax year 2023 redemptions) and they were ready.


Edit to add: Here's the link 1099 — TreasuryDirect

They are not available yet for 2024. I’ll check back in a few weeks.

 

[audreyh1]

Treasury Direct will have a note in your online account messages letting you know the 1099-INT form is available and a link to it.

It only generates that form for years you have redeemed an IBond and assumes all the interest accumulated is taxable.

 

[GenXguy]

I'm stuck keeping mine for some years as long as I'm on the ACA. I can't afford to have any higher MAGI income, despite putting matured CD money into MYGA's.