How to Cash in us Savings Bonds

U.S. Savings Bonds, or EE bonds, have been the prefect prizes for contests and the perfect gifts for babies. However, the United States’ obscure financial laws cause confusion when the time comes to cash the bonds. Where are the bonds cashed? When can I cash my savings bonds? How much are they worth? The United States Treasury provides the answers to all of these questions and more.

Redemption Rules and/or Limitations

Some limitations exist when redeeming U.S. Savings Bonds. First, only bonds that have been held for 12 months can be redeemed. In Also, a bond must have matured for five years. If a bond is younger than five years, the government deducts a penalty worth three months of interest. The last limitation involves the bond redeemer. Except for two unique cases, the owner of a Savings Bond must redeem the bond. A different person may redeem a bond only if the bond was inherited or the bond is in a minor’s name. In the case of an inheritance, the person cashing the bond must have the death certificate to cash the bonds. If a child is too young, the child’s guardian may write on the back of the bond certifying they are the legal guardian and then cash the bond.

Where to Redeem Bonds

Unfortunately, the U.S. Treasury doesn’t keep a list of financial institutions that redeem Savings Bonds. The best bet is to check the local bank; they will likely redeem Savings Bonds. The other option, if no local banks redeem Savings Bonds, is the nearest Federal Reserve. If the bank does offer redemption, it will require identification to cash the bonds. This includes two things: a bank account at the institution that is at least six months old and a valid ID, like a driver’s license. After both items are indetified correctly, the banks will cash in the bonds.

How much are Bonds Worth?

There is no easy way to calculate how the current value of a Savings Bond. The U.S. Treasury provides a calculator on its website to help bondholders determine how much their bonds are worth. If you need help with the calculator, this site contains articles on how to use it.


Redemption Limits

The government lets any one person redeem up to $1000 worth of Savings Bonds at one time. If someone has more than 1000 dollars worth of bonds, the bonds must be signed and shipped to the local Treasury Retail Securities Site with the redeemer’s Social Security number. The locations of these sites, usually members of the Federal Reserve, are provided by the U.S Treasury website or a bond-redeeming bank.

Tax Considerations

Like all income, the money gained from Savings Bonds is subject to Federal and State taxes. This income falls under long-term capital gains taxes. Once the bonds are redeemed, the person will receive a tax form from the IRS either at the time of redemption or at the end of the tax year.

Like most financial instruments, Savings Bonds aren’t that complicated once their quirks are understood. Still if this guide did not provide enough information or left things unclear, please go to the link at the bottom for more information. The U.S. government runs the site and updates the information if there are any changes. div/research/indepth/ebonds/re s_e_bonds_eeredeem.htm