HELP YOUR CUSTOMERS BY KNOWING I BOND BASICS
W ill you handle Series I Bond transactions? If so, it’s important to get familiar with the basics, so you’ll be ready to help your customers. Here’s the low-down:
What is an I Bond ? The I Bond is an inflation-indexed, accrual-type savings bond issued at face value. Purchasers pay $100 for a $100 I Bond. Interest is added monthly, is compounded semi- annually, and is paid when the bond is redeemed.
Denominations Initially, I Bonds are available in 6 denominations: $50, $75, $100, $500, $1,000, and $5,000. Two other denominations, $200 and $10,000, will be offered starting May 1999.
Interest Earnings I Bond interest earnings are inflation- indexed to help protect investors’ purchasing power. The I Bond earnings rate is a combination of two separate rates: a fixed rate of return (set by the Treasury Department) and a variable semi-annual inflation rate (based on changes in the Consumer Price Index for all Urban consumers).
Maturity I Bonds stop earning interest 30 years from the issue date printed on the bond.
Purchase Limit The annual purchase limit on I Bonds is $30,000 per Social Security Number. Adding a coowner does not allow the purchaser to buy more bonds above the $30,000 annual limit. However, I Bond purchases have no impact on the purchase limit for EE Bonds. An individual may buy the maximum amount in I Bonds and also purchase
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the maximum amount in Series EE Bonds ($15,000 issue price) during the same calendar year.
Forms of Registration I Bonds may be registered in single owner, coowner, beneficiary, or certain fiduciary forms. However, they may not be registered in the names of public or private organizations or corporations.
Gifts Can I Bonds be purchased as gifts? Sure! If the purchaser doesn’t know the recipient’s Social Security Number, the purchaser can use his/her own number. I Bonds purchased as gifts are not considered when determining whether a purchaser’s own bonds are in excess of the annual purchase limit.
Purchasing Any issuing agent offering Series EE Bonds can offer I Bonds. I Bonds will also be available for purchase through payroll savings plans of employers who choose to offer them.
Redeeming I Bonds may be redeemed anytime beginning 6 months from the issue date. However, I Bonds are meant to be longer term investments. If an I Bond is redeemed anytime during the first 5 years after issue, any interest earned in the last 3 months is forfeited. Once the bond is 5 years old, there is no penalty for redemption. I Bonds may not be exchanged for another series of savings bonds.
For More Information For more detailed information, see the Savings Bond Resource Guide, the Series I offering regulations (Department of Treasury Circular, Public Debt Series, No. 1-98 (31 CFR Part 359) or the governing regulations (Department of Treasury Circular, Public Debt Series, No. 2-98 (31 CFR Part 360). Additional information also is available on the savings bond website at www.savingsbonds.gov.