Terry,

First off, Happy New Year to you. The questions below are for my mother who doesn’t have internet and has concerns about her Savings Bonds.

1. How do you cash in the Savings Bonds?
2. And when should you cash them in? May 2016 will be year 13.
3.Can she give them to her children to avoid taxes on the interest?

Please advise. Thank you in advance for taking the time to answer.

Cj

Terry Says:  OK, I have written several articles about this process, and will try to answer in brief.  But you should go to Jackie Brahney’s website — www.savingsbonds.com — and start tracking any savings bonds, current rates, and final maturity dates.  As a general rule, your mother shouldn’t cash them in until they reach “final maturity” — likely 40 years.  And without knowing specifically, these bonds are probably a good deal if they are EE bonds with a high “base rate” that was guaranteed when they were purchased years ago.  These are the older bonds that still adjust every six months.  The current rates on them are low, but that high base rate is likely earning more than she could get in CDs today.

If she gifts them to her children or grandchildren, they will have the same tax liability as she has — so there is no avoiding taxes on them.  And she may need the money herself in the future so again, without knowing details, she should just hang on to them.  If interest rates soar in the coming years, there may be a different bit of advice.

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