SERIES E savings bonds - Bogleheads.org (2024)

brandy wrote: ↑Mon Mar 25, 2024 11:12 amI have two SERIES E savings bonds, dated 1967. Where do I need to get them cashed?
Is there interest on them? Twenty-five dollars in 1967.

See link: https://treasurydirect.gov/indiv/tools- ... form-1522/

Regards,

How to Cash (Redeem): Cash at any financial institution that cashes savings bonds. Also take proof of your identity and, if you’re a beneficiary, the bond owner’s certified death certificate.

source: https://www.treasurydirect.gov/savings- ... s-e-308426

How to Cash (Redeem): Cash at any financial institution that cashes savings bonds or mail the bonds and FS Form 1522, and any supporting documents* to Treasury Retail Securities Services, P.O. Box 9150, Minneapolis, MN 55480-9150.

source: https://www.google.com/search?client=fi ... +from+1967

also read more here: https://www.treasurydirect.gov/forms/sav0022.pdf

I thought it would be interesting to look up some details and calculate value adjusted for inflation. I don't know exact months so just assuming February in each year, since BLS inflation calculator doesn't have data yet for March 2024.

Series E Bonds were purchased at 75% face value. A $25 E Bond would have cost $18.75 in Feb 1967 and stopped accumulating interest in Feb 1997. The current value is $125.86.

$125.86 in Feb 2024 has the same buying power as $13.34 in Feb 1967. This bond has lost to inflation. It's worth less now than it was when it was purchased!

If it had been redeemed back in Feb 1997 when it stopped accumulating interest it would have had the same buying power as $64.73 in Feb 1997 (updated incorrect calculation) $25.94 in Feb 1967.

Thanks! Looks like I'll get about $125.

"$125.86 in Feb 2024 has the same buying power as $13.34 in Feb 1967. This bond has lost to inflation. It's worth less now than it was when it was purchased!" Maybe not worth the trip to the bank...

and

"I'm not familiar with bonds that old. I'd investigate what if any penalties might apply for not paying taxes to this point, and given how many years have passed I'm not even sure how'd you'd go about doing that."
Maybe I should just destroy them...

brandy wrote: ↑Mon Mar 25, 2024 12:49 pmThanks! Looks like I'll get about $125.

"$125.86 in Feb 2024 has the same buying power as $13.34 in Feb 1967. This bond has lost to inflation. It's worth less now than it was when it was purchased!" Maybe not worth the trip to the bank...

and

"I'm not familiar with bonds that old. I'd investigate what if any penalties might apply for not paying taxes to this point, and given how many years have passed I'm not even sure how'd you'd go about doing that."
Maybe I should just destroy them...

so the lesson is know the maturity dates for any bonds you own and when they mature, roll them into a new bond at the current rate especially if the bond you're holding will no longer continue earning interest.

don't forget to report/pay the taxes on the interest:

Reporting the Interest for Taxes

Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they may pay the taxes yearly as interest accrues. Most owners choose to defer the taxes until they redeem the bond.

A bond that has reached maturity and stopped earning interest is automatically considered redeemed, and the interest amount is reported to the Internal Revenue Service. The income is interest income and is reported on a 1099-INT, and the owner includes it on the yearly tax return.

If an owner decides to report the interest income yearly, the income from that bond and all other savings bonds for the same owner must continue to be reported yearly. The interest still accrues, in this case, and is not received. Once the bond reaches maturity, the owner must let the IRS know that the interest has been paid yearly.

source: https://www.investopedia.com/ask/answer ... -taxed.asp

did you receive a 1099-INT when the bond matured?

brandy wrote: ↑Mon Mar 25, 2024 12:49 pmThanks! Looks like I'll get about $125.

"$125.86 in Feb 2024 has the same buying power as $13.34 in Feb 1967. This bond has lost to inflation. It's worth less now than it was when it was purchased!" Maybe not worth the trip to the bank...

and

"I'm not familiar with bonds that old. I'd investigate what if any penalties might apply for not paying taxes to this point, and given how many years have passed I'm not even sure how'd you'd go about doing that."
Maybe I should just destroy them...

The IRS doesn't care that much about these long-lost bonds, certainly not enough for them to require someone to amend a nearly 30 year old tax return.

Claim the $107 in interest on your 2024 return. You've still got more money in your pocket than before.

arcticpineapplecorp. wrote: ↑Mon Mar 25, 2024 1:08 pm

brandy wrote: ↑Mon Mar 25, 2024 12:49 pmThanks! Looks like I'll get about $125.

"$125.86 in Feb 2024 has the same buying power as $13.34 in Feb 1967. This bond has lost to inflation. It's worth less now than it was when it was purchased!" Maybe not worth the trip to the bank...

and

"I'm not familiar with bonds that old. I'd investigate what if any penalties might apply for not paying taxes to this point, and given how many years have passed I'm not even sure how'd you'd go about doing that."
Maybe I should just destroy them...

so the lesson is know the maturity dates for any bonds you own and when they mature, roll them into a new bond at the current rate especially if the bond you're holding will no longer continue earning interest.

don't forget to report/pay the taxes on the interest:

Reporting the Interest for Taxes

Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they may pay the taxes yearly as interest accrues. Most owners choose to defer the taxes until they redeem the bond.

A bond that has reached maturity and stopped earning interest is automatically considered redeemed, and the interest amount is reported to the Internal Revenue Service. The income is interest income and is reported on a 1099-INT, and the owner includes it on the yearly tax return.

If an owner decides to report the interest income yearly, the income from that bond and all other savings bonds for the same owner must continue to be reported yearly. The interest still accrues, in this case, and is not received. Once the bond reaches maturity, the owner must let the IRS know that the interest has been paid yearly.

source: https://www.investopedia.com/ask/answer ... -taxed.asp

did you receive a 1099-INT when the bond matured?

The part in red sounds like it describes the electronic bonds on TreasuryDirect. No one issues a 1099-INT for paper bonds until they are actually redeemed (not just "considered" redeemed).

What's weird to me is why the government is so insistent on demanding that the tax at maturity instead of deviously incentivizing bond holders to defer forever. As policy there's just no mathematical reason why it's better to redeem the bond (from the government's point of view, of course.)

Example: Every year we borrow more public debt. If you redeem the bond, the government pays the principal + interest and collects the tax on the interest. Of necessity this is a smaller number, so the government has to borrow more going forward than if the bond was left lying in a drawer forgotten. And every year the government will pay interest on that difference, whereas the dusty paper bond had already stopped accruing. So for Treasury it's a net negative in year 0 and just gets worse every year afterward.

brandy wrote: ↑Mon Mar 25, 2024 12:49 pmThanks! Looks like I'll get about $125.
...
... Maybe not worth the trip to the bank...

and

... Maybe I should just destroy them...

I don't understand something. You said you'll get about $125. I think you said you have two $25 bonds is that correct? My calculations were for a single $25 bond. So you'll get about $250.

Similar to what was said by @exodusNH: it's still money in your pocket that you didn't have before. Though I agree that the hoops to jump through (finding a bank that will redeem them, possibly having to mail in to treasury to redeem, reporting on your income tax) are enough to encourage some people to just throw them away.