I bonds in gift box
Hi Terry,
Thank you for your valuable articles on I bonds. My wife and I bought I bonds for $10,000 in 2022. We also bought I bonds for $10,000 in the gift box. My question relates to my attempt to buy a gift I bond for my adult daughter. I added a new registration for her with myself as the beneficiary, which reads “daughters name” POD “my name”. I selected the I bond as the type of bond to purchase. On the next TreasuryDirect page to buy the bond, the gift registration shows up. However, under the Purchase Amount line is the expression “* Annual limit is $10,000”, which I had never seen before. After entering the amount of $1000 for the gift and submitting, I got the error message “Annual limit exceed. Please edit the purchase amount or edit your pending purchases under ManageDirect, if applicable, and try again.” I have no other pending purchases. I tried to contact TreasuryDirect by email but they did not reply. Do you have any suggestions or recommendations on what to do?
Terry Says
Here’s a great description of how to gift I-Bonds. It comes from www.TheFinanceBuff.com. Note in one of the lower paragraphs, there was a glitch in the Treasury website, that prevented some gifts. Try again!
You buy I Bonds as a gift in two stages: buying and delivering.
You must give the recipient’s name and Social Security Number when you buy a gift. The recipient doesn’t need to have a TreasuryDirect account at this stage. Only a personal account can buy or receive gifts. A trust or a business can neither buy a gift nor receive a gift.
The bonds you buy as a gift go into a “gift box.” You can’t cash out the bonds stored in your gift box. This is analogous to you going to a store and bringing back the gift to your closet. The gift already has the recipient’s name permanently etched on it. You can’t steal the gift for yourself.
The recipient doesn’t know you bought a gift for them until you deliver the gift to them. This is analogous to bringing the gift from your closet when you visit family. The recipient must open a TreasuryDirect account to receive the delivery. You’ll need the recipient’s TreasuryDirect account number to deliver a gift.
I Bonds stored in your gift box are in limbo. You can’t cash them out because they’re not yours. The recipient can’t cash them out either because the bonds aren’t in their account yet.
There’s a minimum wait of five business days between buying and delivering to make sure your bank debit clears. There’s no maximum stay in the gift box. You can pre-purchase gifts and wait to deliver them at a much later time. You can also choose to deliver gifts in bits and pieces as opposed to in one lump sum.
Purchase Limit
The principal amount of delivered gifts counts toward the $10,000 annual purchase limit of the recipient in the year of delivery. You can still buy gifts for others even if you already bought the maximum for yourself.
You can buy a maximum of $10,000 for any recipient in one purchase but there’s no limit on how many recipients you buy for or how many times you can buy for the same recipient in any calendar year. If you’d like, you can buy $10,000 worth of I Bonds for each of your 20 family members or you can make five separate purchases of $10,000 each for the same family member, all in the same calendar year.
[Update on October 11, 2022: A recent TreasuryDirect website update prevented gift purchases when you already bought the maximum $10,000 for yourself this year. I reported this as an inadvertent technical implementation error to TreasuryDirect. I believe it will be fixed eventually but it may take some time.]
If the recipient already received $10,000 in principal amount as gifts this year, buying additional I Bonds on their own will put them over their annual purchase limit. They’ll have to wait until they’re not receiving the maximum gifts.