Cashing Your Series EE Savings Bonds

Quick answer

• Series EE savings bonds are a safe way to save, but they eventually mature and should be cashed.
• You can cash bonds after holding them for at least one year.
• Cashing before five years may mean forfeiting the last six months of interest.
• You’ll need to provide your Social Security number and bond serial numbers.
• For electronic bonds, you’ll likely interact with TreasuryDirect.gov.
• For paper bonds, you’ll need to complete Treasury Form PD 1045.
• Interest earned on savings bonds is subject to federal income tax, but exempt from state and local taxes.

Who this is for

• Individuals who own Series EE savings bonds and are ready to redeem them.
• Savers who want to understand the process and potential tax implications of cashing their bonds.
• Anyone looking for a clear, actionable guide to accessing their matured savings bond funds.

What to check first (before you act)

Goal and timeline

Before you decide to cash your Series EE bonds, consider why you need the money and when you need it. Are you saving for a down payment in six months, or is this for long-term retirement funds? This will influence whether cashing now is the best strategy.

Current cash flow

Understand your current financial situation. Do you have enough readily available cash for your immediate needs and upcoming expenses? Cashing savings bonds might impact your overall liquidity.

Emergency fund or safety buffer

Ensure you have a healthy emergency fund in place. This fund should cover 3-6 months of essential living expenses. Cashing savings bonds to cover unexpected costs without an adequate emergency fund can leave you vulnerable.

Debt and interest rates

Evaluate your outstanding debts. If you have high-interest debt (like credit cards), it might be more financially beneficial to use the bond proceeds to pay down that debt rather than simply cashing the bonds for general savings.

Credit impact

Cashing savings bonds generally does not directly impact your credit score. However, if you use the proceeds to pay down debt, that can indirectly improve your credit over time.

Step-by-step (simple workflow)

1. Determine Bond Ownership: Identify if your bonds are electronic (held in TreasuryDirect) or paper.

• What “good” looks like: You know exactly where your bonds are held and have access to the account or the physical certificates.
• Common mistake: Forgetting about paper bonds you received years ago.
• How to avoid it: Search through old financial documents, safety deposit boxes, or ask family members if they recall giving you any.

2. Check Bond Maturity: Series EE bonds mature 30 years after their issue date. Check the issue date on your bond certificate or in your TreasuryDirect account.

• What “good” looks like: You know the exact maturity date and whether the bond is still earning interest.
• Common mistake: Assuming bonds mature at a fixed, recent date without checking.
• How to avoid it: Use the Treasury’s online bond calculator or check your TreasuryDirect account details.

3. Understand Redemption Rules: You can redeem Series EE bonds after holding them for at least 12 months. However, if redeemed before five years, you forfeit the last six months of interest.

• What “good” looks like: You understand the potential interest loss for early redemption.
• Common mistake: Cashing a bond just shy of the five-year mark and losing significant interest.
• How to avoid it: Calculate the interest lost by redeeming early versus the potential gains from using the funds elsewhere.

4. Gather Necessary Information: For electronic bonds, log in to your TreasuryDirect account. For paper bonds, you’ll need the serial numbers and your Social Security number.

• What “good” looks like: All required documentation and account access are readily available.
• Common mistake: Not having the correct bond serial numbers or personal identification handy when starting the process.
• How to avoid it: Locate your bond certificates or access your TreasuryDirect account well before you intend to redeem.

5. For Electronic Bonds: Initiate Redemption Online: Log in to TreasuryDirect.gov and navigate to the “Redeem Savings Bonds” section. Follow the prompts to select the bonds and destination account.

• What “good” looks like: The redemption request is submitted successfully through the TreasuryDirect portal.
• Common mistake: Entering incorrect bank account information for the direct deposit.
• How to avoid it: Double-check your routing and account numbers before confirming the redemption.

6. For Paper Bonds: Complete Treasury Form PD 1045: Download and fill out the “Application for Redemption of U.S. Savings Bonds” (Form PD 1045). You will likely need to have your signature authenticated.

• What “good” looks like: The form is completed accurately and your signature is properly authenticated by an authorized institution.
• Common mistake: Not getting the signature authenticated, which is a mandatory step for paper bonds.
• How to avoid it: Visit a bank, credit union, or other authorized agent to have your signature verified on the form.

7. Mail Paper Bonds and Form: Send the completed and authenticated Form PD 1045 along with the physical bonds to the address specified on the form. Consider using certified mail for tracking.

• What “good” looks like: The package is sent with tracking, and you have a record of shipment.
• Common mistake: Mailing the bonds without proper tracking or insurance.
• How to avoid it: Always use certified mail with return receipt requested for valuable documents.

8. Receive Funds: For electronic bonds, funds are typically direct-deposited into your linked bank account within a few business days. For paper bonds, it may take several weeks after the Treasury receives them.

• What “good” looks like: The funds appear in your bank account as expected.
• Common mistake: Not accounting for the processing time, leading to unexpected cash flow issues.
• How to avoid it: Plan for the redemption timeline and ensure you have other funds available until the money arrives.

9. Report Interest for Tax Purposes: The interest earned on Series EE savings bonds is subject to federal income tax in the year of redemption. It is exempt from state and local income taxes.

• What “good” looks like: You understand your tax liability and have set aside funds if necessary.
• Common mistake: Forgetting to report the interest income on your tax return.
• How to avoid it: Keep records of your redemption and consult tax resources or a professional for accurate reporting.

10. Consider Education Tax Exclusion (If Applicable): If you are using the bond proceeds for qualified higher education expenses for yourself, your spouse, or dependents, you may be able to exclude the interest from federal income tax.

• What “good” looks like: You meet all the requirements for the education exclusion and file correctly.
• Common mistake: Not meeting the specific criteria for the education exclusion, leading to unexpected tax bills.
• How to avoid it: Review IRS Publication 550 for detailed rules on the education savings bond program.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Cashing before one year	You cannot redeem the bond at all.	Wait until the bond has been held for at least one full year.
Cashing between one and five years	You forfeit the last six months of accrued interest.	Wait until the bond has been held for at least five years to receive all accrued interest.
Forgetting about paper bonds	Bonds may remain uncashed indefinitely, missing potential growth opportunities or earning no interest after maturity.	Conduct regular financial reviews and searches for old documents.
Not authenticating signature on paper bonds	The Treasury will reject your redemption request for paper bonds.	Get your signature authenticated by an authorized financial institution (bank, credit union) before mailing.
Mailing paper bonds without tracking	Risk of loss in transit, making it difficult to prove shipment or recover value.	Always use certified mail with return receipt requested.
Incorrectly entering bank details online	Funds may be delayed or sent to the wrong account.	Carefully verify your bank’s routing and account numbers before submitting the redemption request through TreasuryDirect.
Not reporting interest income on tax return	Potential penalties and interest from the IRS for underreporting income.	Accurately report all redeemed bond interest on your federal income tax return. Consult a tax professional if unsure.
Missing education tax exclusion requirements	You may owe federal income tax on the interest that could have been excluded.	Thoroughly review IRS Publication 550 and ensure all conditions for qualified education expenses and ownership are met before claiming the exclusion.
Redeeming bonds needed for emergencies	Depletes your savings and potentially incurs early redemption penalties if before five years.	Maintain a separate, accessible emergency fund before cashing long-term savings instruments like Series EE bonds.
Not checking bond issue date	You might miss the 30-year maturity date and stop earning interest, or redeem too early and lose interest.	Always verify the issue date to understand your bond’s status and optimal redemption time.
Redeeming bonds with high-interest debt	You pay interest on debt while your bond proceeds earn a lower rate, resulting in a net financial loss.	Prioritize paying down high-interest debt with bond proceeds if the debt’s interest rate exceeds the bond’s effective yield.
Relying solely on paper bond records	Lost or damaged certificates can complicate or prevent redemption.	If possible, consider converting paper bonds to electronic holdings through TreasuryDirect for easier management and security.

Decision rules (simple if/then)

• If your Series EE bond is less than one year old, then you cannot cash it yet, because redemption is not permitted until it has been held for at least 12 months.
• If you need to cash your Series EE bond between one and five years after purchase, then you will forfeit the last six months of interest, because this is a standard redemption penalty.
• If your Series EE bond has been held for five years or more, then you will receive all accrued interest, because the penalty for early redemption no longer applies.
• If you have high-interest debt (e.g., credit cards), then consider using your Series EE bond proceeds to pay down that debt, because the interest saved often exceeds the bond’s earnings.
• If you are using the bond proceeds for qualified higher education expenses, then you may be able to exclude the interest from federal income tax, because the IRS offers this incentive under specific conditions.
• If your Series EE bond is nearing its 30-year maturity date, then plan your redemption strategy, because it will stop earning interest and should be cashed out.
• If you own paper Series EE bonds, then you must complete Treasury Form PD 1045 and get your signature authenticated, because this is the required process for physical bond redemption.
• If you own electronic Series EE bonds, then you can redeem them through TreasuryDirect.gov, because this is the most convenient and secure method for digital bondholders.
• If you are unsure about the tax implications of redeeming your bonds, then consult a tax professional, because accurate reporting is crucial to avoid penalties.
• If you have an emergency fund that is less than 3-6 months of expenses, then consider bolstering it before cashing savings bonds, because unexpected events require readily available cash.
• If your Series EE bonds are beyond their 30-year maturity, then they are no longer earning interest and should be redeemed immediately, because there is no benefit to holding them past maturity.
• If you are uncertain about the exact value of your Series EE bonds, then use the Treasury’s online calculator or check your TreasuryDirect account, because you need precise figures for redemption and tax reporting.

FAQ

When can I cash my Series EE savings bonds?

You can cash Series EE savings bonds after holding them for at least one year.

What happens if I cash my Series EE bonds before five years?

If you cash your bonds before they have been held for five years, you will forfeit the last six months of interest earned.

Are Series EE savings bonds taxable?

The interest earned on Series EE savings bonds is subject to federal income tax in the year of redemption. It is exempt from state and local income taxes.

How do I cash paper Series EE savings bonds?

You need to complete Treasury Form PD 1045, have your signature authenticated by an authorized institution, and mail the form and bonds to the Treasury.

How do I cash electronic Series EE savings bonds?

You can redeem electronic bonds directly through your TreasuryDirect.gov account by following the redemption steps online.

Do I need to report the interest when I cash my savings bonds?

Yes, the interest earned is considered taxable income and must be reported on your federal income tax return for the year you redeem the bonds.

Can I use Series EE bond interest for education expenses tax-free?

Yes, under specific conditions, you may be able to exclude the interest from federal income tax if you use the bond proceeds for qualified higher education expenses. Check IRS Publication 550 for details.

What is the maturity date for Series EE savings bonds?

Series EE savings bonds mature 30 years after their issue date. After this, they stop earning interest.

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

• Detailed tax calculations and specific tax forms: Consult the IRS website or a qualified tax professional for personalized tax advice.
• Redeeming bonds for someone else (e.g., inheritance): This process involves additional legal and documentation requirements. Contact the Bureau of the Fiscal Service for guidance.
• Investigating lost or stolen paper bonds: Procedures for replacement are handled by the Bureau of the Fiscal Service.
• Comparing Series EE bonds to other savings vehicles: Research different investment options based on your risk tolerance and financial goals.
• Specifics of the Education Savings Bond Program: Review IRS Publication 550 for the full eligibility criteria and rules.