How to Redeem Your U.S. Savings Bonds

You may have received a U.S. Savings Bond as a baby gift when you were born more than 30 years ago. Or perhaps your parents purchased them decades earlier, leaving behind a stash of 60-year-old bonds when they passed away.

In both cases, these bonds should be cashed since they are more than 30 years old and no longer earning interest.

First, a little history about U.S. Savings Bonds. These unique investment options date back to the 1930s, when President Franklin D. Roosevelt signed legislation creating what were then known as “baby bonds.’’

These series E bonds, issued from 1941 to 1980, contributed billions of dollars to help the World War II effort, with many Americans purchasing them as a patriotic gesture. They could be purchased at half their face value; that is, a $100 U.S. Savings Bond would cost $50 and be worth $100 at its maturity date in 20 years. These savings bonds have long since passed their maturity dates.

There was also a Series HH savings bond issued from 1980 through 2004. These paper bonds could be purchased at face value (a $100 bond would cost $100), but the feature of this bond is interest is paid directly to the bond holder's bank account through direct deposit twice a year for 20 years. The interest for that year must get reported on the bond owner's federal tax return.*

Unlike other savings bonds, Series HH bonds are worth their face value; that means redeeming a $100 HH series bond will net you $100. This is because your earnings are paid out during the bond's tenure.

If your HH savings bond is older than 20 years, it's no longer earning interest and should be redeemed. However, the good news is that you won't have to pay tax on the face value of the bond when you redeem it. Learn more about HH bonds here.

Today, the government issues two types of savings bonds to Americans: Series EE and Series I. Series EE savings bonds are no longer sold in paper form and can be purchased directly through TreasuryDirect. Series I savings bonds can only be purchased in paper or electronic form when you file your taxes and use your refund to pay for them. Learn more about Series I bonds here.

Here's How to Redeem U.S. Savings Bonds

Redeeming your own savings bonds can be easy, but it's definitely more of a challenge if you're holding a stack of paper bonds that belonged to a deceased family member.

Electronic Series EE and Series I bonds titled in your name can be redeemed through TreasuryDirect. You'll first need to set up an account with them.

Series EE and Series I paper bonds issued in your name can be redeemed at most financial institutions, including Hanscom Federal Credit Union, by bringing your bonds in to a branch and showing a government-issued ID. Series HH paper bonds can only be redeemed through TreasuryDirect. (Helpful hint: call your financial institution first to inquire if they'll redeem paper bonds for you; not all banks or credit unions will.)

When a person named on the savings bond has died, redemption might require additional paperwork.

If the bond is co-owned by two people and one of them dies, the other person named on the bond owns the bond outright and can usually redeem it without issue.

If the bond is titled so that there is an owner and a beneficiary, the beneficiary may be able to redeem the bond at their financial institution by showing their own government-issued ID and the bond owner's death certificate. A beneficiary cannot redeem a savings bond if the owner is still alive.

If a bond is titled only in the name of a person who has passed away (no joint owner or beneficiary) or both joint owners or the beneficiary have died, the bond becomes an estate asset that, once redeemed, will be distributed to the estate's beneficiaries or heirs according to the decedent's particular state's probate laws. When both owners or the owner/beneficiary have died, the bond goes to the estate of the person who passed away most recently. For example, if you find a bond that was jointly titled to your grandfather and father, and your father died after your grandfather, the bond would become part of your father's estate.

If the estate is going through probate, the court-named personal representative or executor can redeem bonds through TreasuryDirect with an accompanying death certificate and additional paperwork.

Not every estate goes through probate, however, and savings bonds can be found years after a probate case has been closed. In these cases even more paperwork may be required. You'll have to send documentation along with the bonds directly to TreasuryDirect. You can read more about these special cases here.

Remember: earnings on U.S. Savings Bonds are considered taxable income by the federal government. You are not required to claim the annual interest earned on your Series EE or Series I bonds at tax time, but you will be responsible for federal taxes on any accrued interest when you redeem the bonds. You will get a 1099-INT for reporting purposes. This interest is not subject to state and local taxes; however, depending on how the bond was titled, it may be subject to additional taxes, which you can read about here.

To find more information on U.S. Savings Bonds and which ones are still earning interest, visit www.treasurydirect.gov.

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* The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.