A Step-by-Step Guide to Redeeming Series EE Savings Bonds

Quick answer

• You can redeem Series EE savings bonds after they’ve been held for at least one year.
• Redemption involves filling out a specific form and submitting it to TreasuryDirect or a financial institution.
• Interest earned is tax-deferred until redemption; you may owe federal income tax on the interest.
• If used for qualified education expenses, the interest may be tax-free.
• Bonds can be redeemed online via TreasuryDirect or by mail/in person through a bank.
• Keep your bond serial numbers and issue dates handy for the redemption process.

Who this is for

• Individuals who own Series EE savings bonds and are ready to access their funds.
• Savers who have held bonds for at least one year and are considering cashing them out.
• Those looking to understand the tax implications and process of redeeming their savings bonds.

What to check first (before you act)

Goal and timeline

Before redeeming, clarify why you need the money and when. Are you saving for a down payment, retirement, or covering an unexpected expense? Your timeline will influence whether now is the best time to redeem, especially considering potential penalties or lost growth if redeemed too early. For example, redeeming bonds held for less than five years may mean forfeiting the last three months of interest.

Current cash flow

Assess your immediate financial needs. Do you have sufficient regular income to cover your expenses without touching your savings bonds? Understanding your cash flow helps determine if redeeming your bonds is a necessity or a choice. If your cash flow is tight, cashing bonds might provide a needed boost, but consider the long-term impact on your savings goals.

Emergency fund or safety buffer

Ensure you have a separate emergency fund in place before cashing out long-term savings like Series EE bonds. An emergency fund should cover 3-6 months of living expenses. If your emergency fund is depleted, it might be wiser to prioritize rebuilding it before redeeming bonds intended for other goals.

Debt and interest rates

Evaluate your outstanding debts. If you have high-interest debt (like credit cards), it often makes more financial sense to pay off that debt with bond proceeds than to continue paying high interest. Compare the interest rate you’re earning on your bonds to the interest rate you’re paying on your debts.

Credit impact

Redeeming savings bonds generally does not directly impact your credit score. However, if you redeem bonds to pay off debt, and that debt is then closed, it can have a minor effect on your credit history over time. Focus on the financial benefit of eliminating high-interest debt.

Step-by-step (simple workflow)

1. Determine if your bonds are eligible for redemption.

• What to do: Check the issue date on your savings bonds. Series EE bonds can be redeemed one year after their issue date.
• What “good” looks like: Your bonds are at least one year old. If they are less than five years old, you will forfeit the last three months of interest upon redemption.
• A common mistake and how to avoid it: Redeeming bonds that are too new and losing accrued interest. Avoid this by carefully checking the issue date and understanding the redemption rules for bonds held less than five years.

2. Identify the owner(s) of the bond.

• What to do: Confirm who is listed as the owner on the bond certificate or in your TreasuryDirect account.
• What “good” looks like: You know exactly who needs to sign for the redemption. If there are multiple owners, all must agree and sign.
• A common mistake and how to avoid it: Assuming only one person needs to sign when there are multiple owners. Always verify all registered owners and ensure all parties consent to the redemption.

3. Gather necessary personal identification.

• What to do: Collect a valid government-issued photo ID (e.g., driver’s license, passport) and your Social Security number.
• What “good” looks like: You have all required identification ready for the redemption process.
• A common mistake and how to avoid it: Not having the correct identification, leading to delays. Ensure your ID is current and matches the name on the bond.

4. Determine your redemption method.

• What to do: Decide whether to redeem online through TreasuryDirect, or by mail or in person through a bank.
• What “good” looks like: You’ve chosen the most convenient and efficient method for your situation.
• A common mistake and how to avoid it: Not realizing the options available. TreasuryDirect is generally the fastest for electronic redemptions, while banks can assist with paper bonds.

5. If redeeming through TreasuryDirect (online).

• What to do: Log in to your TreasuryDirect account. Navigate to the “Redeem Savings Bonds” section and follow the prompts. You will need your bond serial numbers.
• What “good” looks like: The redemption request is submitted successfully online, and funds are directed to your linked bank account.
• A common mistake and how to avoid it: Entering incorrect bond serial numbers or bank account details. Double-check all information before submitting to avoid errors and delays.

6. If redeeming through a financial institution (bank).

• What to do: Visit a bank that offers savings bond redemption services. Bring your bonds, identification, and complete a savings bond owner’s authorization form (FS Form 1522).
• What “good” looks like: The bank teller verifies your identity and documents, processes the redemption, and issues you the funds or a check.
• A common mistake and how to avoid it: Going to a bank that does not handle savings bond redemptions. Call ahead to confirm they offer this service and what documentation they require.

7. If redeeming by mail.

• What to do: Obtain the appropriate form (e.g., FS Form 1522 for individual redemptions). Complete it carefully and have your signature authenticated by a bank or other authorized certifier. Mail the form and bond(s) to the address specified by Treasury.
• What “good” looks like: Your redemption request is processed without issue, and funds are sent to you.
• A common mistake and how to avoid it: Failing to get your signature properly authenticated. This is a critical step to prevent fraud and ensure processing.

8. Understand the tax implications.

• What to do: Be aware that federal income tax is due on the interest earned when you redeem your bonds. You may also owe state income tax, depending on your state’s laws.
• What “good” looks like: You’ve factored the tax liability into your redemption plans and are prepared to pay any taxes due.
• A common mistake and how to avoid it: Forgetting about taxes and being surprised by a tax bill. Consult IRS Publication 550 for details on savings bond taxation or speak with a tax professional.

9. Consider education tax benefits.

• What to do: If you are redeeming bonds to pay for qualified higher education expenses for yourself, your spouse, or dependents, you may be able to exclude the interest from your taxable income.
• What “good” looks like: You meet all the requirements for the education exclusion and can claim it on your tax return.
• A common mistake and how to avoid it: Not meeting the income limitations or spending the money on non-qualified expenses. Review the IRS rules for the education exclusion carefully.

10. Receive your funds.

• What to do: Funds will be deposited directly into your bank account (if redeemed electronically) or provided as a check.
• What “good” looks like: You have successfully received the proceeds from your redeemed savings bonds.
• A common mistake and how to avoid it: Not receiving funds as expected. If there are issues, contact TreasuryDirect or the financial institution that handled the redemption.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Redeeming bonds held less than one year	Bonds cannot be redeemed; you must wait.	Wait until the bond is at least one year old.
Redeeming bonds held less than five years	Forfeiture of the last three months of interest.	Understand the 5-year rule for full interest accrual; weigh the loss of interest against your immediate need for funds.
Incorrectly filling out redemption forms	Delays or rejection of the redemption request.	Carefully review all forms for accuracy, especially serial numbers, owner names, and Social Security numbers.
Not verifying owner information for co-owned bonds	Redemption cannot proceed without all owners’ consent and signatures.	Ensure all registered owners are identified and agree to the redemption before starting the process.
Using a bank that does not redeem savings bonds	Wasted trip and frustration.	Call banks in advance to confirm they offer savings bond redemption services.
Failing to authenticate signature for mail-in redemption	The redemption request will be rejected.	Seek out a bank or authorized certifier to properly authenticate your signature on the redemption form.
Forgetting about tax implications	Unexpected tax liability and potential penalties.	Set aside funds for taxes or consult a tax professional to estimate your liability.
Misunderstanding education exclusion rules	Ineligibility for tax-free interest.	Thoroughly review IRS guidelines on qualified education expenses and income limitations.
Not having proper identification	Inability to complete the redemption process.	Ensure your government-issued photo ID is current and matches the name on the bond.
Entering incorrect bank account details for direct deposit	Funds may be delayed or sent to the wrong account.	Double-check your bank account and routing numbers before submitting online redemptions.

Decision rules (simple if/then)

• If your Series EE bonds are less than one year old, then wait to redeem them because they are not yet eligible for redemption.
• If your Series EE bonds are between one and five years old, then consider the loss of three months of interest before redeeming because you will forfeit that interest.
• If you have high-interest debt (e.g., credit cards), then consider redeeming your bonds to pay off that debt because the interest saved will likely outweigh the bond’s interest earnings.
• If you need funds for a short-term goal (e.g., within 1-3 years), then redeeming bonds may be appropriate, but be mindful of potential interest forfeiture if under five years.
• If your goal is long-term (e.g., retirement), then consider holding onto your bonds, especially if they are nearing their 30-year maturity, as they continue to earn interest.
• If you are using the redemption proceeds for qualified education expenses, then investigate the education tax exclusion because the interest may be tax-free.
• If you are uncertain about the tax implications, then consult a tax professional because they can advise on your specific situation.
• If you have lost your paper savings bonds, then contact TreasuryDirect for assistance with reissuing them before attempting redemption.
• If you are redeeming bonds for a significant expense and have a good cash flow, then consider the opportunity cost of cashing out long-term savings.
• If you are redeeming bonds through TreasuryDirect, then ensure your bank account is linked and verified to facilitate direct deposit.
• If you are redeeming bonds in person at a bank, then call ahead to confirm they can process the redemption and what documentation is required.

FAQ

How long do I have to wait to redeem Series EE savings bonds?

You can redeem Series EE savings bonds one year after their issue date. However, if you redeem them before they have been held for five years, you will forfeit the last three months of interest.

Can I redeem Series EE bonds online?

Yes, you can redeem Series EE savings bonds online through TreasuryDirect if they are registered in your account. This is typically the fastest method.

What documents do I need to redeem Series EE bonds?

You will need your savings bond serial numbers and your Social Security number. For in-person or mail-in redemptions, you will also need a valid government-issued photo ID and potentially a completed savings bond owner’s authorization form.

Is the interest from Series EE bonds taxable?

Yes, the interest earned on Series EE savings bonds is subject to federal income tax upon redemption. It is tax-deferred until then. State income tax may also apply depending on your state’s laws.

Can I use Series EE bond interest to pay for college tax-free?

Possibly. The interest earned on Series EE bonds may be excluded from federal income tax if used for qualified higher education expenses for yourself, your spouse, or dependents, provided you meet certain income limitations and other requirements.

What happens if I lose my paper Series EE bonds?

If you lose paper savings bonds, you should contact TreasuryDirect to report them lost and request reissuance. You will need to provide as much information as possible about the bonds, such as their serial numbers and issue dates.

How long do Series EE bonds earn interest?

Series EE savings bonds earn interest for 30 years from their issue date. After 30 years, they stop earning interest and their value is fixed.

Can I redeem Series EE bonds for someone else?

You can only redeem bonds that are registered in your name or for which you are a legal representative (e.g., executor of an estate). All registered owners must consent to the redemption.

What this page does NOT cover (and where to go next)

• Detailed rules and eligibility for the Series EE education tax exclusion. (Next: Review IRS Publication 570, Tax Guide for U.S. Citizens and Resident Aliens Abroad, or consult a tax professional.)
• Investment strategies for deciding when to redeem bonds versus holding other assets. (Next: Explore general investment planning and asset allocation resources.)
• Specific tax laws for states other than the federal level. (Next: Consult your state’s Department of Revenue or a tax advisor.)
• Redeeming savings bonds issued before Series EE (e.g., Series E). (Next: Research redemption procedures for older bond series, which may differ.)
• Estate planning considerations for savings bonds. (Next: Seek advice from an estate planning attorney or financial advisor.)