Ask Terry Questions municipal zero coupon college bond redemption

municipal zero coupon college bond redemption

By Terry Savage on February 19, 2016 | Wild Card

how do I find out if the bond was cashed.

Terry Says:  These bonds were tax-free general obligation bonds of the State of Illinois. At the time they were first issued, they paid an attractive rate — tax-free — and “promised” a small bonus if the bonds were cashed in and used to pay for college in Illinois.  (They stopped paying that bonus about 20 years ago, saying the wording of the document included something like “if the legislature appropriates the money to pay the bonus.”   And the money for the bonus was never appropriated.)  I know all this because I reported on the bonds at the time — and even bought some myself.

These  were paper bonds, and were sold at a discount — to be redeemed at face value at maturity.  (That’s sort of the way the old Series E Savings bonds worked.)   The amount of the discount depended on the maturity of the bond.  I think the longest maturity was 30 years, so there may still be some of these bonds outstanding.   Mine reached maturity long ago.  At the time, they were sent to Bank One (now Chase) which was the transfer agent, to cash them in.

Well, that was a long way to get around to answering your question.   Do you have a date of purchase, an original confirmation of purchase from the bank or securities dealer that sold them to you?  If so, there is probably a way to track what happened to the bond.   If you have that information, here’s a link to the Chase “Transfer Department: that may be of help.  If not, you could contact the office of the Treasurer in Illinois.  They also handle unclaimed property, so check those records because the bonds may “escheat” to the state if they have matured, but have not been redeemed.



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