Series EE Savings Bond, issued 1982, matured 2012
We have several of these bonds that have reached final maturity. They are issued in my mother’s name and/or myself and others in my mother’s name and/or my sister. Since they have matured, we wondered what options we might have? We would like to reissue them with a POD, or do something fiscally responsible with them. If we cash them there will be tax consequences. Any insight is appreciated.
Sue Dixey
Terry Says
You are actually obligated to report the income in the year of maturity. In practice, the IRS doesn’t tend to go after those who report within a few years after maturity, recognizing that these bonds tend to belong to seniors who may not be familiar with the rules.
Take them to a major bank and cash them in. The money goes to the person whose name is listed on the ownership line of the bond (not the beneficiary POD). That person is responsible for reporting the income on his/her tax return. There is no way to avoid paying these taxes!
Once the cash is paid out, it can be distributed as gifts to other family members. But I do NOT recommend buying more savings bonds, since the interest scheme has changed and they are no longer attractive as investments. Perhaps you might want to open a 529 college savings account for grandchildren with this money. It could grow tax-free for college in this type of account.
