Cashing In Your EE Savings Bonds

Quick answer

• Determine if your EE Savings Bonds are eligible for redemption.
• Understand the holding period rules to avoid lost interest.
• Gather necessary personal information and bond details.
• Decide whether to redeem online or by mail.
• Follow the specific redemption process for your chosen method.
• Be aware of potential tax implications on your earnings.

Who this is for

• Individuals who own U.S. Series EE Savings Bonds.
• People looking to access the funds from their matured or eligible savings bonds.
• Savers seeking to understand the process and requirements for cashing in their bonds.

What to check first (before you act)

Goal and timeline

Before you decide to cash in your EE Savings Bonds, clarify what you plan to do with the money. Do you need it for an immediate expense, a down payment on a home, or are you looking to reinvest it in other assets? Your timeline for needing these funds will significantly influence whether cashing in now is the right move, especially considering potential lost interest if bonds are redeemed before their full maturity or specified holding periods.

Current cash flow

Assess your overall financial situation. Do you have sufficient regular income to cover your expenses, or are you relying on this bond redemption to bridge a gap? Understanding your current cash flow will help you determine if you can afford to keep the bonds longer or if you genuinely need the liquidity now.

Emergency fund or safety buffer

Do you have an adequate emergency fund in place? This typically means having 3-6 months of living expenses saved in an easily accessible account. If your emergency fund is insufficient, cashing in savings bonds might be necessary to bolster your safety net. However, if your emergency fund is healthy, you might have more flexibility in when you redeem your bonds.

Debt and interest rates

Consider any outstanding debts you have, particularly high-interest ones like credit cards or personal loans. If you have significant debt with interest rates higher than the potential return on your savings bonds (or the interest you’d forfeit by cashing them early), paying down that debt might be a more financially sound decision than holding onto the bonds.

Credit impact

Redeeming savings bonds typically does not directly impact your credit score, as it’s not a form of borrowing or a credit transaction. However, how you use the money afterwards could have an indirect effect. For example, if you use the funds to pay off debt, it could positively influence your credit utilization ratio.

Step-by-step (simple workflow)

Step 1: Confirm Bond Ownership and Details

What to do: Locate your Series EE Savings Bonds. You’ll need the serial numbers, face value, and issue dates. If you’ve lost them, you can request a search from the Bureau of the Fiscal Service.
What “good” looks like: You have all the necessary bond information readily available.
A common mistake and how to avoid it: Not having bond details. Avoid this by organizing your financial documents regularly and keeping a record of your bond serial numbers.

Step 2: Determine Eligibility for Redemption

What to do: Check the issue date of your bonds. Series EE Bonds are eligible for redemption 12 months after their issue date.
What “good” looks like: You know your bond’s issue date and whether it has passed the 12-month mark.
A common mistake and how to avoid it: Attempting to redeem bonds before they are 12 months old. This will result in a penalty of the last three months of interest.

Step 3: Understand the Interest Penalty Period

What to do: Be aware that if you redeem your EE Savings Bonds before they have been held for five years, you will forfeit the last three months of interest.
What “good” looks like: You understand the trade-off between needing the cash and potentially losing some earned interest.
A common mistake and how to avoid it: Cashing bonds before the five-year mark without realizing the interest forfeiture. Calculate the lost interest to see if it’s worth it for your specific situation.

Step 4: Calculate Potential Earnings and Tax Liability

What to do: Estimate the current value of your bonds and the interest earned. Consult IRS Publication 550 for information on the taxability of U.S. Savings Bonds. Interest is generally subject to federal income tax but exempt from state and local income taxes.
What “good” looks like: You have a reasonable estimate of the total amount you’ll receive and the potential tax you might owe.
A common mistake and how to avoid it: Forgetting about taxes. Remember that the interest earned is taxable income at the federal level.

Step 5: Decide on Redemption Method (Online vs. Mail)

What to do: For bonds issued in 2005 or later, you can often redeem them online through TreasuryDirect. For older bonds or if you prefer, you can redeem them by mail.
What “good” looks like: You’ve chosen the method that best suits your convenience and the type of bonds you own.
A common mistake and how to avoid it: Not checking the online redemption eligibility for your specific bond series. This can lead to unnecessary mailing delays.

Step 6: If Redeeming Online (TreasuryDirect)

What to do: Log in to your TreasuryDirect account. Navigate to the “Redeem” section and follow the on-screen instructions, providing the necessary bond and bank account information.
What “good” looks like: The redemption is processed smoothly, and funds are deposited into your linked bank account.
A common mistake and how to avoid it: Having incorrect bank account information linked. Double-check all routing and account numbers before submitting.

Step 7: If Redeeming by Mail

What to do: Obtain Form PD 3000, “Savings Bond Redemption,” from the Bureau of the Fiscal Service website or by calling them. Fill it out completely and have your signature officially witnessed. Send the form along with your savings bonds to the address specified on the form.
What “good” looks like: The form is filled out accurately, your signature is properly witnessed, and the package is sent via a trackable method.
A common mistake and how to avoid it: Incorrectly filling out the form or not getting your signature witnessed. This will cause delays or rejection of your redemption request.

Step 8: Receive Funds

What to do: Whether redeemed online or by mail, funds will be deposited into your designated bank account or sent via check.
What “good” looks like: You have received the full redemption amount.
A common mistake and how to avoid it: Not receiving funds within the expected timeframe. Follow up with TreasuryDirect or the Bureau of the Fiscal Service if there are unusual delays.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Redeeming bonds before 12 months	Loss of last three months of interest.	Wait until the bond is at least 12 months old.
Redeeming bonds between 12 months and 5 years without understanding the penalty	Forfeiting the last three months of interest.	Calculate the lost interest and compare it to your immediate need for funds.
Not having bond details readily available	Delays in the redemption process, potential need for bond search.	Keep organized records of all financial assets, including bond serial numbers.
Incorrectly filling out redemption forms (for mail-in)	Rejection of the redemption request, requiring resubmission and causing delays.	Carefully read instructions, fill out all fields accurately, and get signatures witnessed as required.
Not getting signatures witnessed for mail-in redemption	The redemption request will be rejected.	Ensure your signature is witnessed by an authorized person (e.g., bank teller, notary public).
Using incorrect bank account information for online redemption	Funds sent to the wrong account or redemption failure.	Double-check routing and account numbers before submitting.
Forgetting about federal income tax on earned interest	Underestimating the net amount received, potential tax surprises.	Consult IRS Publication 550 and factor in federal tax liability.
Not understanding the bond’s maturity date	Potentially redeeming before full maturity and missing out on maximum interest accrual.	Check the issue date and understand that bonds earn interest for 30 years.
Assuming redemption is instant	Unrealistic expectations about when funds will be available.	Allow for processing time, especially for mail-in redemptions.

Decision rules (simple if/then)

• If your EE Savings Bonds were issued less than 12 months ago, then do not redeem them because you will lose the last three months of interest.
• If your EE Savings Bonds were issued more than 12 months ago but less than 5 years ago, then calculate the value of the last three months of interest and compare it to your immediate financial need before redeeming.
• If you need the funds for a true emergency (e.g., job loss, medical crisis), then redeem your EE Savings Bonds regardless of the interest penalty because financial security is paramount.
• If you have high-interest debt (like credit cards), then consider redeeming your EE Savings Bonds to pay off that debt because the interest saved on the debt will likely outweigh any interest earned on the bonds.
• If your EE Savings Bonds are approaching their 30-year final maturity, then consider holding onto them to maximize their earnings potential, unless you have an immediate and compelling need for the cash.
• If your bonds were issued in 2005 or later, then check TreasuryDirect for online redemption eligibility because it’s typically faster and more convenient.
• If your bonds were issued before 2005 or you prefer not to use online services, then prepare to redeem them by mail, ensuring all forms are correctly completed and witnessed.
• If you are unsure about the tax implications of redeeming your bonds, then consult IRS Publication 550 or a tax professional because the interest earned is subject to federal income tax.
• If your primary goal is to preserve capital and earn a modest, guaranteed return, then holding onto your EE Savings Bonds until maturity is a sound strategy.
• If you are redeeming by mail, then send your bonds and forms via certified mail with return receipt requested because it provides tracking and proof of delivery.

FAQ

How long do I have to hold EE Savings Bonds before I can cash them in?

You can cash in your EE Savings Bonds 12 months 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.

Will I have to pay taxes when I cash in my EE Savings Bonds?

Yes, the interest earned on EE Savings Bonds is subject to federal income tax. However, it is exempt from state and local income taxes.

How do I find out the current value of my EE Savings Bonds?

You can find the value of your EE Savings Bonds on the TreasuryDirect website by entering the bond’s serial number. For older bonds or if you have lost them, you can request a search from the Bureau of the Fiscal Service.

Can I redeem EE Savings Bonds online?

Yes, if your bonds were issued in 2005 or later, you can typically redeem them online through your TreasuryDirect account. For older bonds, redemption is usually done by mail.

What happens if I redeem my EE Savings Bonds before they are 12 months old?

If you redeem your EE Savings Bonds before they have been held for 12 months, you will forfeit the last three months of interest.

Do I need to get my signature witnessed to redeem EE Savings Bonds by mail?

Yes, if you are redeeming your EE Savings Bonds by mail, your signature on Form PD 3000 must be officially witnessed by an authorized individual, such as a bank teller or notary public.

How long does it take to receive my money after redeeming EE Savings Bonds?

Online redemptions are usually processed within a few business days, with funds deposited into your bank account. Mail-in redemptions can take several weeks to process after the Bureau of the Fiscal Service receives your request.

What is the final maturity of EE Savings Bonds?

EE Savings Bonds earn interest for 30 years from their issue date. After 30 years, they stop earning interest and should be redeemed.

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

• Specific tax advice for your individual situation. Consult a tax professional.
• Investment strategies for reinvesting the proceeds from your savings bonds. Explore investment options.
• Detailed information on other U.S. Savings Bond series (e.g., I Bonds, older series). Research other savings bond types.
• Estate planning considerations for savings bonds. Consult an estate planning attorney.
• Legal requirements for minors or individuals under guardianship cashing savings bonds. Seek legal counsel.