The I Bond Thread

[braumeister]

Can I change an I-Bond from POD to my daughter to joint owner ship with my wife? IF so can someone tell me how using Treasury Direct?

That is explained clearly in the Help section on TD.
https://www.treasurydirect.gov/indiv/help/TDHelp/howdoi.htm#addsecondary

 

[DaveLeeNC]

I'm not sure the concept of moving from one account to another really applies. You'd be better off with a lawyer, but I thought a trust was kinda like a person. So your "move" would be like a gift? Interesting question, but I doubt even if you got the best Treasury Direct representative on the planet (after waiting 2 hours), you'd be satisfied.

Thanks for the response. What you said makes sense. OTOH, I set up this trust account with TD in 2020 and moved $55k ( original face value) worth of bonds into (paper) into this trust account at TD at that time... So I wonder...

dave

 

[pb4uski]

This is probably addressed somewhere in this thread and I guess I could find it here about as fast as calling TDirect ("your wait time is at least 2 hours") .

My wife/I have a revocable living trust that holds most of our taxable/investible assets (for the convenience of our heirs, primarily). This is where our I-Bonds live (a TD account in the name of the trust).

I can buy $10K per year into this account. I could also set up accounts in the name of wife/me and buy $10k each into those (plus do the gifting trick if I choose). If I buy $10K into each of those accounts, when can I move them to our account held by the Trust?

Thanks. And basically I would view TD as a unsupported service right now. They no longer answer emails (directing you to the phone or website) and the phone (even at around 8:00 a.m.) is a wait of "2 hours OR MORE". Gives me second thoughts about more I-Bonds.

dave

Not sure of the answer, but I don't think you can move them other than redeeming them and then transferring the proceeds to the trust.

We actually have his, her and joint revocable living trusts that as it has turned out, the only purpose is to hold I Bonds. It increases our annual allowance to $55k (including $5k for a tax refund).

For our personal I Bonds, I am DW's beneficiary and vice versa. If we die simultaneously, DD will have to figure it out but she's a smart CPA so I'm not too worried.

 

[DaveLeeNC]

Not sure of the answer, but I don't think you can move them other than redeeming them and then transferring the proceeds to the trust.

We actually have his, her and joint revocable living trusts that as it has turned out, the only purpose is to hold I Bonds. It increases our annual allowance to $55k (including $5k for a tax refund).

For our personal I Bonds, I am DW's beneficiary and vice versa. If we die simultaneously, DD will have to figure it out but she's a smart CPA so I'm not too worried.

The existence of this form https://www.treasurydirect.gov/forms/sav1851.pdf would strongly imply that you can do this.

dave

 

[pb4uski]

Sure does, but I'm not sure if I see a good reason why to do so. Our estate plan is more focused on use of beneficiary designations, enhanced life estate deeds, POD, etc to avoid probate than the use of living trusts.

 

[DaveLeeNC]

Sure does, but I'm not sure if I see a good reason why to do so. Our estate plan is more focused on use of beneficiary designations, enhanced life estate deeds, POD, etc to avoid probate than the use of living trusts.

We really don't like the lack of secondary beneficiaries limitation with IBonds so our goal is to get them to our trust as quickly as possible. I don't think that I have ever encountered an investment asset with that limitation, but maybe I just don't remember.

dave

 

[pb4uski]

While I would like to see contingent beneficiary designations for I Bonds, the chance that we'll die simultaneously is remote and even if we did the process for redeeming or re-registering IBonds in that event seems pretty straightforward from what I have read.

 

[lawman]

Just changed the registration on all my I-Bonds. What is the difference between John OR Mary and John WITH Mary? The OR option was not listed as a choice..

 

[Dash man]

Just changed the registration on all my I-Bonds. What is the difference between John OR Mary and John WITH Mary? The OR option was not listed as a choice..

The OR option is on all my payroll deduction bonds before spring 2006. I assume they changed back then for some reason.

 

[lawman]

The OR option is on all my payroll deduction bonds before spring 2006. I assume they changed back then for some reason.

I guess you are correct. The "OR" option is on all the paper bonds that were converted to electronic. Apparently those cannot be changed using the drop down menu..I have no idea how to change them.

 

[Dash man]

I guess you are correct. The "OR" option is on all the paper bonds that were converted to electronic. Apparently those cannot be changed using the drop down menu..I have no idea how to change them.

That makes sense, since that’s about when I converted them to electronic.

 

[beowulf]

I think the “with” wording is the same as the old “or” in terms of ownership. I won’t waste my time calling TSP to speak with a confused CSR.

 

[Gumby]

As some of you know, I have been tracking the CPI changes and calculating the November 1 rate reset. As of now, if the CPI remains unchanged, it would be 6.9%. If inflation on a year-over-year basis remains at 8.5% in September, then the new I-Bond rate would be 7.04% (assuming there is no discretionary fixed rate component added by Treasury). Gasoline continues to decrease in price, so we could see the year-over-year inflation rate drop in August and September. If inflation goes down to just 8% in September, then the new I-Bond rate would be 6.09%. If inflation goes down to 7.5% in September, then the new I-Bond rate will be only 4.18%.

This causes me to scratch my chin and ask "What about the May 1, 2023 rate?" That will be calculated based on the CPI in March 2023 divided by CPI in September 2022. So, let's assume that the inflation rate goes down a little and this September the year over year rate is 8.0% which will mean a CPI of 296.255 (Sept 21 CPI of 274.310 x 1.08 = 296.255). The March 2022 CPI was 287.504, which will make the Nov. 1 I-Bond rate 6.09% (yay for those of us with I-Bonds!). So let's assume the Fed is successful in squeezing inflation out of the economy and it goes down to a year-over-year rate of 3.5% in March of 2023. That means the CPI will be (Mar 22 CPI 287.504 x 1.035 = 297.567). Accordingly, the May 1, 2023 I-Bond rate will be only 0.9% ((297.566/296.255) -1) x 200) = 0.9%. Interestingly, if the inflation rate drops to 7.5% in Sept 22 and then 3.5% in Mar 2023, the May 2023 I-Bond rate will be 1.82%.

In fact, for the May 1, 2023 I-Bond APR to exceed 4%, if inflation is 8% in September 2022, inflation in March 2023 will need to be at a year-over-year rate of 5.1% or greater. (296.255x 1.02)/287.504)= 1.051. If inflation is 7.5% in September 2022, inflation in March 2023 will need to be at a year-over-year rate of 5.6% or greater for May 2023 I-Bond rates to exceed 4%

What this tells me is that the Day of the I-Bond may draw rapidly to a close if Powell & Co. are successful and, accordingly, that I should plan to unwind my I-Bond position in late 2023, after the Nov 2022 rate expires plus 3 months (so I don't get a penalty).

 

[REWahoo]

What this tells me is that the Day of the I-Bond may draw rapidly to a close if Powell & Co. are successful...

Based on my personal recollection of the last time the Fed was tasked with bringing inflation under control, I'm not anticipating needing to do any I-Bond unwinding any time soon. Of course this time might be different...

 

[Dash man]

I’m wondering if inflation tracks down (which I think may happen very slowly) and interest rates stay elevated for a few years (which I think they will), along with high government spending, will this trigger the treasury to add to the fixed rate component of iBonds to attract buyers?

 

[Gumby]

In March 1980, the peak inflation rate was 14.8%. It took until January 1983 to get it down to 3.5%. I do note that causes of inflation in the 1970s were somewhat different, it had become far more entrenched before Volcker got up to speed, the economy and the labor market are qualitatively different now, and we have a shorter road to travel from June's 9.1%. I don't know exactly how long it will take the fever to break, but I think it will take less than 34 months.

 

[beowulf]

I’m wondering if inflation tracks down (which I think may happen very slowly) and interest rates stay elevated for a few years (which I think they will), along with high government spending, will this trigger the treasury to add to the fixed rate component of iBonds to attract buyers?

I doubt it. They did not do it in the recent past when interest rates were near or at 0. The treasury has made it very clear that they really have no interest in I bonds or EE bonds. They have taken great pains to make the process of buying both types of bonds as difficult as possible. You used to be able to walk into just about any federally chartered bank or credit union and buy or cash in EE or I bonds. Now you can only buy them online and the only ones you can cash in a bank are the old paper ones. And good luck finding a bank that will do that.

My belief is that they wanted to do away with all savings bonds but faced congressional opposition. When my parents passed, they left me a thick stack of regular E bonds almost all with original values $18.75 or $37.50 and a bunch of HH bonds they had bought when the E bonds reached final maturity. My employer back then offered a program that allowed you to buy EE bonds every month with direct deduction from your salary. They were then mailed to you by Treasury. Very easy to buy and cash.

That time is long gone and trying to buy an EE gift bond for someone is a major hassle. I don’t think young people have a clue about these bonds, as opposed to those of us who grew up with them. Anyone remember the little books you put a quarter into every week and then took it to a bank when it reached $18.75?

 

[Gumby]

I’m wondering if inflation tracks down (which I think may happen very slowly) and interest rates stay elevated for a few years (which I think they will), along with high government spending, will this trigger the treasury to add to the fixed rate component of iBonds to attract buyers?

They would only do it if they felt it necessary to bring in buyers. That has not been a problem lately, as they are swamped with people who want in.

I have been thinking about I-Bonds from the government's perspective. In certain respects, they can serve the same purpose that War Bonds did in WWII. While those bonds were pitched as a patriotic action to help finance the war, what they really did was cause the money supply to shrink (voluntarily) and thereby help fight the inflation that was caused by the massive new demands for war production. I-bonds could do the same. So I think it would behoove the Treasury to make the purchase process easier and remove the yearly limits.

 

[braumeister]

When my parents passed, they left me a thick stack of regular E bonds almost all with original values $18.75 or $37.50

Those were my "big" presents for birthdays and Christmas all through my youth. When I graduated college I went to the local bank and cashed them all in to buy my first car. I remember almost getting writer's cramp from all the signatures.

 

[beowulf]

Yep - and my parents gave them to friends and relatives at weddings, new babys, anniversaries, birthdays, etc. Every year our kids got a bond for their birthday, the amount of which kept increasing as they got older. Part of the idea was to give them something that would grow with time and they wouldn’t blow the cash immediately. The other was mailing cash in larger amounts wasn’t a good idea and my parents didn’t have a checking account until the late 1960s. I really do miss the simplicity of buying and selling bonds.

 

[MichealKnight]

I-BOND- future interest rate?

Yes the 9.62% is great. I"m late to the party and just purchases (2) of them -----for me and DW. Goal is to hold 5 years - then use it for college because it's a legit expense - and as I understand it - makes them tax free.

Any guesses as to what the rate will be in future years?

2022: Pretend it stays 9.62.

After that.....

2023, 2024,2026, 1026.... if it averages 3.22%.........that means my avg annual return was 4.5%.......for no risk, and potential tax-free for college I'd be rather pleased with 4.5.

Many here have invested in said bonds so I gotta believe you have some hope or prediction for future rates. If inflation gets tamed...and the rates go back to sort of nothing......then I'd be a sucker.

Any guesses for rates in upcoming years? Thanks

 

[MichealKnight]

Macing out IBONDS 2022

Was hoping someone could tell me if this is right or wrong.

$10k for me.

$10k - DW bought for her.

$10k - as a couple we gift DD

$10K - as a couple we gift DS
**************************

NOW.... after all that.


Can I buy ANOTHER bond as a gift to DW ? And can she buy another IBOND for me as a gift? This would be a total of $60,000 for family of 4.....

Also, any method to buy even more? Thanks....

 

[MissMolly]

I don't think you can gift as a couple. I-bonds are purchased by individual entities. But you could buy $5,000 and your wife could buy $5,000 for each of your kids and then gift them, so your end result is still $10,000 to each kid.

Yes, you can buy and gift to each other, but if you each already bought $10,000 in 2022 you cannot deliver the gifts until 2023 due to the $10,000 limit in each calendar year. But while it's sitting there waiting to be delivered it will still earn interest.

 

[wallygator69]

I don't think you can gift as a couple. I-bonds are purchased by individual entities. But you could buy $5,000 and your wife could buy $5,000 for each of your kids and then gift them, so your end result is still $10,000 to each kid.

Yes, you can buy and gift to each other, but if you each already bought $10,000 in 2022 you cannot deliver the gifts until 2023 due to the $10,000 limit in each calendar year. But while it's sitting there waiting to be delivered it will still earn interest.

If you bought a gift bond on June 1st 2022 and gifted on January 1st 2023 and have to wait one year to sell them does the clock start for the one year??


Thx


Wally

 

[MissMolly]

The clock starts on the [-]day [/-] month of purchase.