You are most likely to run across an EE Bond by accident or while cleaning out a file box. What follows is an update on what these once very sought out and popular Savings vehicles are, a few items you should know, and an update and our thoughts on them in todays modern age.
EE Bonds and their brother the I Bond are US government issued bonds that are issued at a discount to the face value, and grow to maturity over time. Originally issued in paper form, now one may purchase through the Treasury Direct website electronically. They have an annual $10k maximum contribution per Tax ID number.
Also knows at Patriot Bonds (buying them in the day was deemed patriotic, hence the name) EE Bonds have the following characteristics again from Treasury Direct:
- EE bonds earn interest monthly.
- Interest is compounded semiannually, meaning that every 6 months we apply the bond’s interest rate to a new principal. The new principal is the sum of the prior principal and the interest earned in the previous 6 months. Thus, your bond’s value grows both because it earns interest and because the principal gets bigger.
- Since May 2005, new EE bonds earn a fixed rate of interest that is set when you buy the bond. They earn that interest for the first 20 years. We may adjust the rate or the way they earn interest after 20 years.
- For older EE bonds, rules concerning interest may have varied.
Cashing them in – Careful on getting taxes on your income tax return
If you have physical certificates you will need to go to a Bank or other Financial institution… Careful when cashing as the interest becomes taxable and we have experienced many institutions not delivering the tax information to the owner, but to the IRS (always) causing tax problems… just be sure to keep a copy of the interest you received and make sure it makes it’s way to that years tax return…
You of course want to cash any that are earning a very low rate and especially those that have matured !
What interest rate your EE Bond is earning again from Treasury Direct:
Since May 2005, new EE bonds earn a fixed rate of interest that is set when you buy the bond. They earn that interest for the first 20 years. We may adjust the rate or the way they earn interest after 20 years.
For older EE bonds, rules concerning interest may have varied.
See more about interest for EE Bonds that we issued:
How to find out if you may have lost an EE Bond
A Social Security number and a confirmation of not being a bot should get you a quick yes or no!
Mine was a no and looked like this:
Pro- Tip – May want to check your oldest family member’s Social as these were more popular the farther back we go in time.
In closing, we are neutral at best on EE Bonds and their relative the – I Bond … About 3-4 years ago, due to a weird interest rate period, I Bonds had a moment where they earned abnormally high rates… we had contacts rush to buy them only to crash the Treasury Direct website, and have difficulty finding them once they were purchased, these instances were completed all electronically. We also have had a fair amount of “Found” certificates, that were not earning funds.
Have a Great “EE Bond Refresher” Update!
John A. Kvale CFA, CFP
AI Content Authenticity: All of the following text content has been completed by myself and has not been edited or created by AI. Occasionally we do use AI for images and will note when appropriate.
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
