Redeeming Your Series EE Savings Bonds

Quick answer

• Gather your bond information, including serial numbers and issue dates.
• Determine if your bonds are eligible for redemption based on their issue date and your financial goals.
• Understand the tax implications, especially if redeeming before maturity or for education expenses.
• Decide whether to redeem online through TreasuryDirect or by mail with a Federal Reserve Bank.
• Have your Social Security number and bank account information ready for direct deposit.
• Consult a tax professional if you have complex tax situations or are unsure about the implications.

Who this is for

• Individuals who own Series EE U.S. Savings Bonds and are considering cashing them in.
• Savers looking for a way to access funds from long-term, safe investments.
• People who need to understand the process and potential tax consequences of redeeming their savings bonds.

What to check first (before you act)

Goal and timeline

Before redeeming your Series EE savings bonds, clarify why you need the money and when you need it. Are you saving for a short-term goal like a down payment or a long-term one like retirement? Knowing this will help you decide if redeeming now is the best strategy, or if holding onto the bonds longer would be more beneficial.

Current cash flow

Assess your current financial situation. Do you have immediate income needs that the bond proceeds would address? Understanding your regular income and expenses will help you determine if you can afford to tap into these savings without disrupting your ongoing financial stability.

Emergency fund or safety buffer

Ensure you have an adequate emergency fund in place before redeeming your savings bonds, especially if the redemption is for unexpected expenses. A readily accessible emergency fund (typically 3-6 months of living expenses) provides a financial cushion, preventing you from needing to cash out investments prematurely.

Debt and interest rates

Review any outstanding debts you have. If you have high-interest debt (like credit card balances), it might be more financially prudent to use the proceeds from your savings bonds to pay off that debt rather than simply adding it to your savings. Compare the interest rate on your debt to the potential return from keeping the bonds invested.

Credit impact

Redeeming savings bonds typically does not directly impact your credit score, as it’s a transaction with the U.S. Treasury, not a lender. However, if you use the redeemed funds to pay off debt, that action could indirectly influence your credit over time by reducing your credit utilization or debt-to-income ratio.

Step-by-step (simple workflow)

1. Locate your savings bonds

What to do: Find all your Series EE savings bonds, whether they are physical paper bonds or electronic bonds held in TreasuryDirect. For physical bonds, look through old safe deposit boxes, file cabinets, or personal records. For electronic bonds, log in to your TreasuryDirect account.
What “good” looks like: You have a complete list of your bonds, including their serial numbers, face value, and issue dates.
A common mistake and how to avoid it: Misplacing or losing physical bonds. To avoid this, store them in a secure, fireproof location and keep a record of their details elsewhere. If lost, you can request replacement through the Treasury Department.

2. Determine issue dates and redemption eligibility

What to do: Check the issue date for each bond. Series EE bonds are issued electronically through TreasuryDirect or as paper bonds. Paper bonds issued before 2011 have different redemption rules than those issued after. Electronic bonds are held in TreasuryDirect.
What “good” looks like: You know the exact issue date for every bond. This is crucial because savings bonds cannot be redeemed until they have been held for at least 12 months.
A common mistake and how to avoid it: Assuming all bonds can be redeemed immediately. Avoid this by verifying the issue date and understanding the 12-month holding period.

3. Understand the redemption value

What to do: Calculate the current redemption value of your bonds. For bonds issued after May 1, 2005, the value is the original purchase price plus accrued interest. For bonds issued before May 1, 2005, the bond may have earned interest for 30 years and stopped earning new interest.
What “good” looks like: You have an accurate estimate of what each bond is worth today. You can find this information on the TreasuryDirect website if your bonds are held there, or by using their redemption value calculator for paper bonds.
A common mistake and how to avoid it: Underestimating the bond’s value or assuming it continues to earn interest indefinitely. Avoid this by checking the bond’s maturity date and its specific interest accrual rules.

4. Consider tax implications

What to do: Understand how the interest earned on your savings bonds will be taxed. Interest is generally subject to federal income tax in the year of redemption. It is exempt from state and local income taxes.
What “good” looks like: You are aware of the tax liability and have factored it into your decision. If you are redeeming bonds to pay for qualified education expenses for yourself, your spouse, or a dependent, you might be eligible for tax-free redemption, but specific income limitations apply.
A common mistake and how to avoid it: Not considering taxes or assuming all interest is tax-free. Avoid this by consulting IRS Publication 550, “Investment Income and Expenses,” or speaking with a tax advisor.

5. Choose your redemption method

What to do: Decide whether to redeem your bonds electronically through TreasuryDirect or by mail. For electronic bonds, redemption is done directly through your TreasuryDirect account. For paper bonds, you will need to fill out a specific form and mail it.
What “good” looks like: You’ve selected the most convenient and appropriate method for your situation. TreasuryDirect is generally faster for electronic bonds.
A common mistake and how to avoid it: Sending incorrect forms or not having proper identification for mail-in redemptions. Avoid this by carefully reviewing the instructions on the Treasury Department’s website or the redemption form.

6. Prepare necessary information

What to do: Gather your Social Security number (SSN), your bank account and routing number for direct deposit, and your identification. For paper bonds, you may need to have your signature certified by a bank or other authorized institution.
What “good” looks like: All required personal and financial information is readily available and accurate.
A common mistake and how to avoid it: Providing incorrect bank account information, leading to delays or misdirected funds. Double-check all numbers before submitting.

7. Initiate the redemption

What to do: If redeeming electronically, log into your TreasuryDirect account and follow the prompts to redeem your bonds. If redeeming by mail, complete the appropriate savings bond redemption form (e.g., FS Form 1522 for individuals) and mail it to the address specified by the Bureau of the Fiscal Service.
What “good” looks like: The redemption request is successfully submitted. You receive a confirmation of your request.
A common mistake and how to avoid it: Not keeping a copy of the redemption request or confirmation. Always make copies for your records.

8. Receive your funds

What to do: Wait for the funds to be deposited into your bank account. For electronic redemptions, this usually takes a few business days. For mail-in redemptions, it can take several weeks.
What “good” looks like: The correct amount is deposited into your specified bank account.
A common mistake and how to avoid it: Not tracking the redemption status. If you don’t receive your funds within the expected timeframe, follow up with the Treasury Department.

Common mistakes (and what happens if you ignore them)

| Mistake | What it causes | Fix