TREASURY DIRECT (U. S. Savings Bonds)
The University of Iowa is participating in TreasuryDirect which is a program for purchasing electronic U.S. Treasury products, including savings bonds. The University will no longer be offering paper bonds effective after May 1, 2006. In order to participate in payroll deductions for savings bonds, participants will need to open a TreasuryDirect account at www.treasurydirect.gov. Once your account is established you can then use the UI Employee Self Service site to establish your monthly payroll deduction in any amount you choose.
Employees interested in purchasing Treasury securities are advised to research the current terms of purchases and redemptions on the U.S. Treasury website at www.publicdebt.treas.gov. This FAQ is not intended to be an all inclusive source of information for savings bonds.
Can I purchase both "EE" and "I" Bonds by payroll deduction at The University of Iowa?
Yes, but you must have an established TreasuryDirect account already set up in order initiate payroll deductions. Payroll deductions are initiated on the UI Employee Self Service site and transmitted to your TreasuryDirect account after every monthly payday.
Can I purchase EE or I Bonds on a "tax deferred" basis?
No. Bonds are purchased with "after tax" funds. The earnings on bonds can be deferred until they are cashed.
What is the smallest bond I can purchase?
$25 when bonds are purchased electronically.
Do I have to have the "full" purchase price deducted each month?
No. You can have as little as $1 deducted each month for the purchase of a bond. The purchase price of an EE Bond is ½ its face value. The purchase price of an I Bond is its face value.
How much do bonds earn?
EE Bonds earn a fixed rate of interest. Interest rates on new issues are determined on May 1 and November 1. Rates are based on 10 year Treasury Note yields.
I Bonds earn interest from a combination of a fixed rate of return and a semiannual inflation rate. Fixed rates are determined on May 1 and November 1 and last for 30 years. The inflation rate is also determined on May 1 and November 1 and is based on the Consumer Price Index.
How long can I hold bonds and still earn interest?
Series I Bonds earn interest until they reach final maturity at 30 years from the issue date. The interest rate is a combination of a fixed rate and a semiannual inflation rate.
Series EE Savings Bonds purchased after May 2005 will earn a fixed rate of interest set at the time of purchase. The U.S. Treasury guarantees EE bonds will double in value after 20 years. EE bonds with issue dates prior to May 1, 2005 will continue to earn interest according to the terms that were in effect when they were issued.
How soon after I purchase bonds can they be cashed?
If you cash a bond before 5 years, you forfeit the 3 most recent months of interest on the bond. Effective February 1, 2003, bonds purchased can be cashed only after 12 months from their issue date.
How do I know how much my bonds are worth?
Paper bonds can be taken to a bank or credit union to find the current value. You can also go to the www.savingsbonds.gov web site and use the "Savings Bond Calculator." Electronic bond values can be found by logging into your TreasuryDirect account and clicking the “Current Holdings” tab.
What’s the difference between a "beneficiary" and a "co-owner?"
A beneficiary can cash a bond only if the owner is deceased. A co-owner can cash a bond without the knowledge or consent of the other co-owner. Bonds can only have one (1) beneficiary.
Can I purchase bonds for another person?
Yes. Bonds can be purchased in the name of another person (grandchild, son, daughter, etc).
Do I have to pay taxes on the interest from bonds when I cash them?
Yes. Earnings on bonds are subject to federal taxes but are exempt from state and local taxes.
Can I use EE Bonds to pay for my child’s college education?
Yes. The earnings on bonds can be exempt from all taxes if they are used to pay for qualified educational expenses, are registered in the name of an owner or co-owner who is at least 24 years of age, and whose modified adjusted gross income is under a figure adjusted each year (refer to a bank or the www.savingsbond.gov web site). The child cannot be the owner of the bond for this exemption. The child can be the beneficiary.
Where can I redeem or cash bonds?
Paper bonds can be cashed at any of 40,000 banks and credit unions nationwide. Electronic bonds are redeemed through your TreasuryDirect account.
How can I replace a lost paper bond?
The Bureau of the Public Debt is authorized to replace lost, stolen, or destroyed I Bonds. You can file a claim by writing to: Bureau of the Public Debt, Parkersburg, West Virginia 26106-5312. You'll need to complete Form PD F 1048 (pdf).