Buying Savings Bonds As a Gift
United States savings bonds are non-marketable debt instruments that you can buy for yourself or as a gift for another person. As of 2011, the Treasury sells two types of savings bonds: EE bonds and I bonds. You can buy the bonds as electronic bonds through the website of the U.S. Treasury or as paper bonds through your local bank. The gift recipient's name appears on the front of the bond and only that named recipient can redeem the bond.
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Ownership Types
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You can buy a bond as a gift for an individual or buy a bond as a joint gift for two individuals. If you buy a bond for two people, either owner can redeem the bond without the knowledge of the other. If one bond owner dies, the other bond owner becomes the sole owner. You can also buy a bond for one individual but list someone else as the pay-on-death beneficiary and that person assumes ownership of the bond if the original owner dies. If you do not name a beneficiary on a bond and the owner dies, the bond becomes part of the deceased's estate.
Social Security Number
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When you buy bonds in person at a bank, you must provide the bank with the name and Social Security number of the bond recipient. If you do not know the recipient's Social Security number, you must provide the banker selling you the bond with your own Social Security number. Using your Social Security number does not mean that you have an ownership stake in the bond or any tax liability in connection with it. To buy bonds as a gift online, you must have the recipient's name and Social Security number and you cannot use your own Social Security number.
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Denominations
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You can buy paper I bonds from banks in denominations of $50, $75, $100, $200, $500, $1,000 and $5,000. You can buy online I bonds from the Treasury for any amount in excess of $25. You do not have to buy the bonds in round dollar amounts. You can buy EE bonds at banks in denominations of $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000. You can buy online EE bonds for any amount in excess of $25. When you buy I bonds you pay the face value, but when you buy EE bonds you pay 50 percent of the face value as EE bonds reach face value at maturity.
Other Considerations
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You can buy savings bonds as gifts for U.S. citizens, permanent residents and civilian employees of the U.S. regardless of where they are based. Unlike other types of federally issued bonds, you can also buy savings bonds for minors.
The gift recipient cannot redeem the bond for at least one year and anyone redeeming a bond within five years of purchase forfeits three months of interest. The bonds continue to pay interest for up to 30 years. EE bonds have variable interest rates but normally take 12 years to reach par value. I bonds pay both a flat fixed rate and a variable inflation-adjusted interest rate. You can spend up to $5,000 per year on both paper bonds bought through banks and online bonds.
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