The I Bond Thread

[ivinsfan]

I don't think so... basically, until you die the assets are taxed just like you own them with the revocable living trust that we are referring to where you are the grantor, trustee and primary beneficiary. YMMV.



https://www.kiplinger.com/article/r...ur lifetime, there are,if you are the trustee).

IANAL but I think these are the rules a revocable trust is different then an irrevocable trust .

 

[pb4uski]

I don't think so, the only downside would be if all of the future announced rates are over the current 7.12% and I don't see that as a huge risk. Let's put it this way, once the recent 9.62% rate was available I bought our 2025 allowance.

 

[pb4uski]

IANAL but I think these are the rules a revocable trust is different then an irrevocable trust .

True, so I guess it depends on why Gearhead Jim is creating the trust. I presume that it would be revocable as I think most living trusts are revocable.

 

[Gearhead Jim]

True, so I guess it depends on why Gearhead Jim is creating the trust. I presume that it would be revocable as I think most living trusts are revocable.

We would create a pair of revocable living trusts (for me and for her), as described in this previously-linked article:

https://thefinancebuff.com/buy-more-i-bonds-treasury-direct-trust.html

But, not everything you read on the internet is true...

 

[ivinsfan]

We would create a pair of revocable living trusts (for me and for her), as described in this previously-linked article:

https://thefinancebuff.com/buy-more-i-bonds-treasury-direct-trust.html

But, not everything you read on the internet is true...

Sadly your legal advice isn't worth a lot, this isn't complicated.

 

[Gearhead Jim]

Sadly your legal advice isn't worth a lot, this isn't complicated.

The legal advice we got from an attorney who specifically says he's not a tax expert, was to be cautious. Good advice.
The financial advisor seems to be, as I suspected, either incompetent or crooked (perhaps wanting us as future clients to be milked).

Our tax man just replied that the income from the bonds should be passed down from the trust to us, and will be taxed at our individual rate.

 

[Gearhead Jim]

When creating a trust for the primary purpose of buying Ibonds, what are the differences between a "Trust Agreement" and a "Declaration of Trust"?

 

[bpgdeg1234]

I don't think so, the only downside would be if all of the future announced rates are over the current 7.12% and I don't see that as a huge risk. Let's put it this way, once the recent 9.62% rate was available I bought our 2025 allowance.

So pb4uski, you bought 3 years of iBonds for gift box for future delivery for both you and your spouse?

 

[Sunset]

I'm sure this has been addressed but it's a 29-page-long thread so forgive me.


Is there any downside to buying an I-bond now as opposed to waiting until the new rate kicks in?

Buy NOW.

That way you get 6 months of 7.12%, and 6 months of ~9.6%, and then whatever comes after or you sell out.

 

[Wupot2020]

Trust?

My wife and I both purchased ibonds earlier this year in separate accounts. I setup new TD accounts yesterday under the name of our trust and purchased another $10k. I received an email rejecting the transaction (eventhough the funds were deducted from my checking account). The trust uses the same SS as our individual accounts but I thought this was allowed?

 

[Gearhead Jim]

My wife and I both purchased ibonds earlier this year in separate accounts. I setup new TD accounts yesterday under the name of our trust and purchased another $10k. I received an email rejecting the transaction (eventhough the funds were deducted from my checking account). The trust uses the same SS as our individual accounts but I thought this was allowed?

Did the email tell you why they rejected the transaction?

 

[Wupot2020]

Yes…”your purchase exceeds the annual savings bond purchase limitation. Please be advised that the limit is 10k per series and TIN per calendar year…”

Full disclosure…i also purchased $10k as a gift yesterday from my individual account. I am assuming the rejection note is related to the transaction from the trust and not the gift transaction. (The rejection email doesn’t reference an account #.). Surprisingly, I can’t tell when I login since all accounts show as if the transactions went through without an issue. I can’t find a note anywhere in the account saying there is a problem

 

[wmc1000]

Bought $10K each for DW and I as individuals. Will do gift purchases before end of month to get to $40K

 

[Mulligan]

My wife and I both purchased ibonds earlier this year in separate accounts. I setup new TD accounts yesterday under the name of our trust and purchased another $10k. I received an email rejecting the transaction (eventhough the funds were deducted from my checking account). The trust uses the same SS as our individual accounts but I thought this was allowed?

They are very good at withdrawing the money and then safely returning it to you, trust me based on my personal experience. Before everybody and their dog was buying these, TD allowed an extra 10k purchase slide with just an email warning not to do it again. A few of my friends pulled it off. By the time I did it, they updated their software and ended that party and rejected mine.

 

[Wupot2020]

Thanks. I think I see my mistake in the transaction. How quickly do they return the funds? The email says at least 8 weeks..

 

[MuirWannabe]

I guess there’s no way to automatically link the Treasury Direct accounts to Quicken? I couldn’t find Treasury Direct as a listed option, so thinking I’ll just have to manually update.

 

[pb4uski]

The legal advice we got from an attorney who specifically says he's not a tax expert, was to be cautious. Good advice.

The financial advisor seems to be, as I suspected, either incompetent or crooked (perhaps wanting us as future clients to be milked).



Our tax man just replied that the income from the bonds should be passed down from the trust to us, and will be taxed at our individual rate.

Tax man got it right.

 

[pb4uski]

So pb4uski, you bought 3 years of iBonds for gift box for future delivery for both you and your spouse?

Yes, 2023, 2024 and 2025 are now sitting in the gift boxes. 2021 and 2022 are in our individual accounts. Also, $5k 2021 tax refund in my account. Add in 2022 allocations for 3 trusts and total is $135k.

 

[4legsgood]

If I buy some as a gift for my child to be delivered next year, does that count against this year's gift tax exclusion limit or next year's?

Gift tax exclusion doesn't count for gifts to spouse so ignore this post if that is what you are doing.

Harry Sit of thefinancebuff believes the gift tax exclusion applies to the year of purchase. Not that clear in his article, but he makes his opinion clear in a reply to a comment below the article.

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

...
Hester says
JANUARY 2, 2022 AT 10:21 PM

Is buying I Bonds or delivering I Bonds considered a gift to the recipient? If I buy $50,000 for someone this year and deliver $10,000 to him each year over the next 5 years, do I need to file a gift tax return?

REPLY
Harry Sit says

JANUARY 2, 2022 AT 11:00 PM

As soon as you buy, the recipient’s name and Social Security Number are attached to the bond, which can’t be changed. Interest will start accruing to the recipient at that point. I consider that as a gift. Because $50,000 is greater than the $16,000 annual gift tax exclusion amount, I will file a gift tax return.

 

[bpgdeg1234]

Yes, 2023, 2024 and 2025 are now sitting in the gift boxes. 2021 and 2022 are in our individual accounts. Also, $5k 2021 tax refund in my account. Add in 2022 allocations for 3 trusts and total is $135k.

Wow, I did 2023 for me and DW in gift boxes with 2022 allotment already purchased in our individual accounts. Wasn't sure though of doing any subsequent years so curious of your thoughts on this.

Thanks in advance,
bpg

 

[Gumby]

Harry Sit of thefinancebuff believes the gift tax exclusion applies to the year of purchase.....

Although phroig's question was about gifts to children, it is important to remember that the gift tax doesn't apply to gifts between spouses.

https://www.investopedia.com/terms/u/unlimited-marital-deduction.asp

 

[pb4uski]

....Wasn't sure though of doing any subsequent years so curious of your thoughts on this.

Thanks in advance,
bpg

I am looking at it this way... assuming that I'll get 7.12% for 6 months, 9.62% for 6 months, 6.25% for 6 months and 0% thereafter. That is $11,207 on a $10,000 purchase dated 4/1/22. If I withdraw on 1/1/24 that is an XIRR of 6.71% (for 21 months) and if I withdraw on 1/1/25 that is an XIRR of 4.22% (for 33 months).

Can I find a 33 month CD or UST that pays 4.22%? Nope.
Can I find a 21 month CD or UST that pays 6.71%? Nope.

 

[Mulligan]

I Bond Rate May 2022

Thanks. I think I see my mistake in the transaction. How quickly do they return the funds? The email says at least 8 weeks..

Maybe 4 or 5 days tops before it was back in my account….But that was a few months ago. They may be swamped now….Hopefully not though.

 

[calmloki]

Thanks. I think I see my mistake in the transaction. How quickly do they return the funds? The email says at least 8 weeks..

(see my post #430)
I muffed gift purchases for Gal and I on 3/15 and suspect we got the same letters as you. Haven't seen funds returned yet...

 

[bpgdeg1234]

I am looking at it this way... assuming that I'll get 7.12% for 6 months, 9.62% for 6 months, 6.25% for 6 months and 0% thereafter. That is $11,207 on a $10,000 purchase dated 4/1/22. If I withdraw on 1/1/24 that is an XIRR of 6.71% (for 21 months) and if I withdraw on 1/1/25 that is an XIRR of 4.22% (for 33 months).

Can I find a 33 month CD or UST that pays 4.22%? Nope.
Can I find a 21 month CD or UST that pays 6.71%? Nope.

Thanks as usual. Always like the way you think.
bpg