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US Savings Bonds matured .. Convert Tax Deferred? |
Dad has a number of US Savings Bonds Es and EEs that are close to maturing. He has elected not to declare taxable interest income until they are cashed. At one time, I thought it possible to exhange these US Savings Bonds for Series H bonds and continue to defer the tax on the accrued interest. 1) Am I wrong about the last statement? 2) If NOT, is that still possible? Dad is retired and believes in compounding tax deferred. He does have other investments, but keeps these as his way of duty to country. PLEASE keep your answers to this topic and not any other type of investment or savings possibilitiesl Thanks in advance. 2) EXCHANGING SERIES E OR EE BONDS FOR SERIES HH BONDS 2.1) I have some Series EE bonds that I'd like to exchange for Series HH bonds. How do I do this? To exchange your Series EE bonds for Series HH bonds, you should: Take your EE bonds to a financial institution where you have an account (if possible, the institution should also be one that redeems EE Savings Bonds). Work with an officer or employee of that institution to complete an exchange application (PD F 3253), particularly the portion of the form that covers direct deposit of semiannual interest payments on the HH bonds. If the institution doesn't redeem EE bonds, it's a good idea for you to try completing the top part of the exchange application before you go to the bank. Note: The Savings Bond Wizard and PD F 3600, Tables of Redemption Values, are useful in determining how much your bonds are worth and how much interest the bonds have earned. As you complete the exchange application, sign the request for payment on the back of each bond. The institution processes your EE and E bonds through the commercial check collection system (if the institution is one that ordinarily redeems Savings Bonds). Otherwise, the institution guarantees or certifies your signature on the back of each of your EE bonds and sends those unredeemed, uncashed EE bonds to a Federal Reserve Bank that processes Savings Bonds. In either event, the institution sends your completed and signed exchange application to a Federal Reserve Bank and ensures that any additional funds required in the transaction are remitted. The total redemption value of the EE bonds being exchanged must be at least $500--the minimum HH bond denomination. EE bonds eligible for an exchange must be at least six months old, and EE bonds and E bonds are eligible up to one year from the month in which they reach final maturity and stop earning interest--30 years after issue for E bonds with December 1965 and later issue dates and for EE bonds; and, 40 years after issue for E bonds with issue dates older than December 1965. 2.2) What are the tax implications of redeeming a Series E bond and converting it to a Series HH bond? If you exchange eligible Series E or EE bonds or savings notes for Series HH bonds, you can either: include the accumulated ("accrued") E or EE bond or note interest on your Federal tax return for that year, OR continue to postpone ("defer") doing so until you cash your HH bonds, you give up owning them, or your HH bonds stop earning interest--20 years after their issue date--whichever happens first. (To be eligible for an exchange, EE bonds have to be at least 6 months old. EE/E bonds and savings notes are eligible for an exchange up to a year after the month in which they stop earning interest.) I have attached a link to the website where I got the above info from. Source(s): https://www.washington.edu/admin/payroll... |
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