Savings bonds are a secure and reliable way to save money, often purchased for oneself or as gifts. When the time comes to access these funds, understanding Where Do You Cash In Savings Bonds is essential. This guide provides a comprehensive overview of where and how to redeem your EE or I savings bonds, ensuring a smooth and straightforward process.
Cashing Paper EE or I Savings Bonds
Paper savings bonds, particularly older ones, might seem a bit old-fashioned in today’s digital age. However, they still represent real value and can be readily cashed when needed. Here are the primary locations for redeeming your paper bonds:
At Your Local Bank or Credit Union
For many, the most convenient option for cashing paper savings bonds is their local bank or credit union. If you have an established account with a bank, they are often willing to cash your bonds, especially if you have been a long-term customer.
Here’s what you should do:
- Contact your bank branch: Before visiting, call your local branch to confirm they cash savings bonds.
- Inquire about limits: Banks may have limits on the amount they will cash at one time. Ask about any such restrictions.
- Prepare required documents: Typically, you will need a valid photo ID. The bank might also request your Social Security number and proof of account ownership.
If you plan to cash bonds worth more than $1,000 at a bank, it’s wise to check if they require a signature certification. This might involve additional steps or forms.
Through the U.S. Department of the Treasury by Mail
If you prefer not to use a bank, or if you need to cash a large value of bonds, you can redeem your paper savings bonds directly through the U.S. Department of the Treasury. This is a reliable method, although it requires a bit more preparation and patience due to mailing times.
Steps for cashing bonds by mail:
- Obtain FS Form 1522: Download and complete FS Form 1522, “Redemption Request for Payment of United States Savings Bonds.” You can find this form on the TreasuryDirect website or through a general online search.
- Signature Certification (if needed): If the total redemption value exceeds $1,000, you will likely need to have your signature certified by an authorized certifying officer. FS Form 1522 provides details on signature requirements and who can certify your signature.
- Mail the form and bonds: Send the completed FS Form 1522 and the original paper savings bonds to the address specified on the form. It is crucial to send copies of any supporting documentation and retain the original bonds until instructed otherwise, unless specifically directed by the form instructions to send the original bonds.
A gray building icon representing the office of Treasury Retail Securities Services, the destination for mailing savings bond related inquiries.
This method is particularly useful for larger amounts or situations where you may not have easy access to a bank branch that cashes savings bonds.
Cashing Electronic EE or I Savings Bonds
Electronic savings bonds offer a more streamlined and modern approach to saving. Redeeming them is also designed to be convenient and primarily online.
Through Your TreasuryDirect Account
The primary way to cash electronic savings bonds is through your TreasuryDirect account, the online platform where these bonds are managed.
Here’s how to redeem electronic bonds online:
- Log in to TreasuryDirect: Access your TreasuryDirect account using your username and password.
- Navigate to ManageDirect: Once logged in, go to the “ManageDirect” section.
- Redeem Securities: Under “Manage My Securities,” click on “Redeem securities.”
- Follow the prompts: The system will guide you through the redemption process. You will typically need to specify which bonds you want to cash and where you want the funds to be deposited (usually your linked bank account).
TreasuryDirect provides a helpful video tutorial and step-by-step instructions on their “How do I…?” section to guide you through the online redemption process.
Important Considerations Before Cashing
Before you decide where to cash in savings bonds and proceed with the redemption, keep these key points in mind:
Holding Period and Interest Accrual
- Minimum Holding Period: You must hold an EE or I savings bond for at least one year before you can cash it.
- Interest Penalty: If you cash a bond before it reaches five years of age, you will forfeit the last three months of interest earned.
- Maximum Interest Earning Period: EE and I bonds earn interest for up to 30 years. Holding them longer generally means maximizing your returns.
Consider your financial goals and the bond’s maturity date to make the most informed decision about when to cash your savings bonds. Use the Savings Bond Calculator to determine the current value of your bonds.
Tax Implications
When you cash in savings bonds, the interest earned is generally subject to federal income tax.
- Form 1099-INT: You will receive a Form 1099-INT reporting the interest earned in the year you cash the bonds.
- Bank Redemption: If you cash your bonds at a bank, they are responsible for providing you with Form 1099-INT.
- Treasury Redemption: If you redeem bonds through the Treasury, they will mail you Form 1099-INT the following January, or it will be available in your TreasuryDirect account for electronic bonds.
Understanding the tax implications helps you plan accordingly and avoid any surprises when tax season arrives. You can find more details about tax information for EE and I savings bonds on the TreasuryDirect website.
Conclusion
Knowing where do you cash in savings bonds is the first step in accessing your saved funds. Whether you have paper bonds best suited for redemption at a local bank or by mail, or electronic bonds easily cashed online through TreasuryDirect, several accessible options exist. By understanding the process for each type of bond and considering factors like holding periods and tax implications, you can confidently and efficiently redeem your savings bonds when the time is right.
