Redeeming Your EE Savings Bonds

Quick answer

• Understand the minimum holding period before redemption.
• Check if your bond has reached its final maturity date.
• Determine if you qualify for tax benefits on interest earned.
• Gather necessary personal information and bond details.
• Choose your redemption method: online, by mail, or through a financial institution.
• Be aware of potential tax implications for interest earned.

Who this is for

• Individuals who own U.S. Series EE Savings Bonds.
• Those looking to access the funds from their matured or redeemable savings bonds.
• People who want to understand the process and potential benefits or drawbacks of redeeming their bonds.

What to check first (before you act)

Goal and timeline

Before redeeming, clarify why you need the funds and when you need them. Are you saving for a down payment next year, or do you need the money for retirement in a decade? Your timeline will influence whether it’s the right time to cash out.

Current cash flow

Assess your current financial situation. Do you have a steady income, or are you facing unexpected expenses? Understanding your cash flow helps determine if redeeming savings bonds will disrupt your regular budget or if it’s a viable option to supplement your income.

Emergency fund or safety buffer

Ensure you have a sufficient emergency fund in place before tapping into long-term savings like EE bonds. A robust emergency fund (typically 3-6 months of living expenses) can cover unforeseen costs without forcing you to redeem investments prematurely.

Debt and interest rates

Consider any outstanding debts you have. If you have high-interest debt (like credit cards), it might be more financially beneficial to use the bond proceeds to pay off that debt rather than simply adding it to your savings. Compare the interest rate on your debt to the potential return you’re getting from your savings bonds.

Credit impact

Redeeming savings bonds generally does not directly impact your credit score. However, if you use the funds to pay down significant debt, it can indirectly improve your credit utilization ratio, which is a positive factor for your creditworthiness.

Step-by-step (simple workflow)

1. Verify Bond Eligibility for Redemption

What to do: Check the issue date of your Series EE Savings Bonds. Bonds can typically be redeemed after one year from their issue date. If redeemed before five years, you may forfeit the last six months of interest.
What “good” looks like: You’ve confirmed your bond has passed the one-year mark and you understand the potential interest forfeiture if redeeming before five years.
A common mistake and how to avoid it: Assuming you can redeem immediately after purchase. Avoid this by consulting the bond’s issue date and TreasuryDirect’s guidelines.

2. Determine Final Maturity

What to do: Series EE Savings Bonds mature 30 years from their issue date. At this point, they stop earning interest, and you must redeem them to access the principal and any accrued interest.
What “good” looks like: You know the final maturity date and are aware that after this date, the bond is no longer earning interest.
A common mistake and how to avoid it: Forgetting about the 30-year maturity. Keep a record of your bond issue dates to avoid missing the redemption window.

3. Assess Tax Implications

What to do: Understand that the interest earned on Series EE Savings Bonds is subject to federal income tax. However, it is exempt from state and local income taxes. You may be able to exclude the interest from your taxable income if you use the bond’s proceeds to pay for qualified higher education expenses for yourself, your spouse, or dependents, provided certain conditions are met.
What “good” looks like: You’ve reviewed the IRS rules for the education exclusion or understand you’ll owe federal tax on the interest.
A common mistake and how to avoid it: Assuming all bond interest is tax-free. Avoid this by checking the IRS Publication 550, Investment Income and Expenses, or consulting a tax professional.

4. Gather Necessary Information

What to do: Collect your Social Security number, the bond serial numbers, and any personal identification documents required by the redemption method you choose.
What “good” looks like: All required documents and information are readily available.
A common mistake and how to avoid it: Not having the bond serial numbers or full ownership details. Keep your bond records organized.

5. Choose Your Redemption Method

What to do: Select how you want to redeem your bonds. Options include:

• Online: Through TreasuryDirect.gov if the bonds are held electronically.
• By Mail: By completing specific forms and mailing them to the Bureau of the Fiscal Service.
• Through a Financial Institution: Some banks and credit unions may assist with redeeming paper savings bonds.

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 all redemption methods have specific procedures. Research each option beforehand.

6. Complete and Submit Redemption Request

What to do: Fill out the necessary redemption forms accurately. For paper bonds redeemed by mail, you’ll likely need to get your signature guaranteed by a financial institution.
What “good” looks like: Your request is complete, accurate, and submitted according to the chosen method’s instructions.
A common mistake and how to avoid it: Making errors on the forms or not getting a signature guarantee when required. Double-check all information and requirements.

7. Receive Funds

What to do: Wait for the funds to be disbursed. If redeeming electronically through TreasuryDirect, funds are typically transferred to your linked bank account. If redeeming by mail or through a financial institution, you may receive a check or direct deposit.
What “good” looks like: You’ve received the correct amount of funds in your designated account or via check.
A common mistake and how to avoid it: Not tracking the redemption status. If you don’t receive funds within the expected timeframe, follow up with the Bureau of the Fiscal Service.

8. Report Taxes (if applicable)

What to do: If you did not qualify for the education exclusion or if you redeemed bonds that were issued more than one year ago and are subject to federal income tax, report the interest earned on your federal tax return.
What “good” looks like: You’ve accurately reported any taxable interest income to the IRS.
A common mistake and how to avoid it: Forgetting to report taxable interest. This can lead to penalties and interest from the IRS.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Redeeming before one year	Forfeiture of all accrued interest.	Wait until the bond is at least one year old before redeeming.
Redeeming between one and five years	Forfeiture of the last six months of accrued interest.	Understand the interest forfeiture rules and wait until at least five years if maximizing interest is a priority.
Forgetting about the 30-year final maturity	Bonds stop earning interest, leading to lost potential earnings.	Keep detailed records of bond issue dates and be aware of the 30-year maturity.
Not considering tax implications	Unexpected tax liability on earned interest, reducing net proceeds.	Research the taxability of savings bond interest and the education exclusion rules. Consult a tax professional if unsure.
Missing signature guarantee requirement (paper bonds)	Redemption request will be rejected, causing delays.	Carefully read redemption instructions for paper bonds and ensure your signature is properly guaranteed by an authorized institution.
Incorrectly filling out redemption forms	Delays in processing or rejection of the redemption request.	Double-check all personal information, bond serial numbers, and selections on the redemption form before submission.
Not having original bond documentation (for paper)	Difficulty in proving ownership and processing the redemption.	Keep original savings bond certificates in a safe place. If lost, you’ll need to file a claim for lost or stolen bonds.
Assuming all interest is tax-free	Underpayment of taxes, leading to potential penalties and interest from the IRS.	Understand that interest is subject to federal income tax unless specific education exclusion criteria are met.
Not checking for lost or stolen bonds first	Attempting to redeem bonds that are no longer in your possession.	If you cannot locate your paper bonds, file a “Search for Lost Savings Bonds” request with the Bureau of the Fiscal Service before initiating a redemption.
Not understanding the education tax exclusion rules	Missing out on potential tax savings or redeeming bonds for education without meeting criteria.	Carefully review IRS Publication 550 and the specific requirements for the education tax exclusion before redeeming for this purpose.

Decision rules (simple if/then)

• If your bond is less than one year old, then do not redeem it because you will forfeit all accrued interest.
• If your bond is between one and five years old, then consider waiting until it is five years old to avoid forfeiting the last six months of interest, because this maximizes your earnings.
• If your bond has reached its 30-year final maturity, then redeem it promptly because it is no longer earning interest.
• If you need funds for qualified higher education expenses and meet the IRS criteria, then consider using your bond proceeds to potentially exclude the interest from federal income tax, because this can be a significant tax benefit.
• If you have high-interest debt (e.g., credit cards), then consider using your bond proceeds to pay off that debt first because the interest savings will likely outweigh the bond’s modest earnings.
• If your goal is to preserve capital for a long-term objective and your current financial situation is stable, then consider holding onto your EE bonds even past maturity if they are still earning interest (up to 30 years) because they offer a guaranteed return.
• If you own paper savings bonds and need to redeem them, then be prepared to get your signature guaranteed by a financial institution because this is a standard security measure.
• If you purchased your EE bonds electronically through TreasuryDirect, then redeeming them online is generally the fastest and most convenient method because it integrates directly with your bank account.
• If you are unsure about the tax implications of redeeming your bonds, then consult with a tax professional because they can provide personalized advice based on your specific financial situation.
• If your primary goal is to access cash immediately for an emergency, then redeem your EE bonds, but first ensure you have a sufficient emergency fund, because you do not want to deplete your safety net.
• If you lost your paper savings bonds, then file a “Search for Lost Savings Bonds” request with the Bureau of the Fiscal Service before attempting to redeem them because you need to establish proof of ownership.
• If you are redeeming bonds that are older than five years and not for education, then expect to pay federal income tax on the interest earned, because it is considered taxable income.

FAQ

Q: How long do I have to wait to redeem my Series EE Savings Bonds?

A: You can redeem Series EE Savings Bonds one year after their issue date. However, if you redeem them within the first five years, you will forfeit the last six months of interest.

Q: When do my Series EE Savings Bonds stop earning interest?

A: Series EE Savings Bonds stop earning interest 30 years from their issue date, which is their final maturity. At this point, you must redeem them to access the principal and any accrued interest.

Q: Are Series EE Savings Bonds taxable?

A: The interest earned on Series EE Savings Bonds is subject to federal income tax. However, it is exempt from state and local income taxes.

Q: Can I use my EE Bond proceeds for college and avoid taxes?

A: Yes, under certain conditions, you may be able to exclude the interest from your taxable income if you use the bond’s proceeds to pay for qualified higher education expenses for yourself, your spouse, or dependents. You must meet specific requirements outlined by the IRS.

Q: What if I lost my paper savings bonds?

A: If you’ve lost your paper savings bonds, you’ll need to file a “Search for Lost Savings Bonds” request with the Bureau of the Fiscal Service. This process can take time, so it’s best to do this as soon as you realize they are missing.

Q: How do I redeem savings bonds that are held electronically?

A: If your bonds are held electronically in a TreasuryDirect account, you can redeem them directly through the TreasuryDirect website. This is generally the fastest method.

Q: What information do I need to redeem my savings bonds?

A: You will need your Social Security number, the bond serial numbers, and potentially identification documents. The exact requirements depend on your chosen redemption method.

Q: Can a bank redeem my paper savings bonds for me?

A: Some financial institutions, like banks and credit unions, can assist with redeeming paper savings bonds. They typically require your signature to be guaranteed.

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

• Specific current interest rates for new savings bonds. (Check TreasuryDirect.gov for current rates.)
• Detailed tax advice for every possible scenario. (Consult a qualified tax professional.)
• Investment advice on whether bonds are the right asset for your portfolio. (Consider speaking with a financial advisor.)
• The process for redeeming savings bonds held by a deceased individual. (Refer to the Bureau of the Fiscal Service’s guidance on estate redemptions.)
• Information on other types of U.S. savings bonds (e.g., Series I Bonds). (Visit TreasuryDirect.gov for details on other savings bond series.)