Steps To Cashing An EE Savings Bond

Quick answer

• EE Savings Bonds can be cashed after they have been held for at least one year.
• Interest accrues for 30 years, so check the bond’s issue date to determine its maturity.
• Cashing bonds before five years may mean forfeiting the last three months of interest.
• You’ll need to complete a specific form and verify your identity.
• Tax implications vary; interest is tax-deferred but taxable when redeemed if not used for qualified education expenses.
• Bonds issued by a deceased owner may have different procedures.

Who this is for

• Individuals who own U.S. Series EE Savings Bonds and wish to redeem them for cash.
• Those who need to access funds and are considering their savings bond holdings.
• Investors who are unsure about the process, timing, and tax implications of cashing their bonds.

What to check first (before you act)

Goal and timeline

Before you decide to cash your EE bond, 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? Understanding your timeline will help you assess if cashing the bond is the right move, especially considering potential lost interest or tax consequences.

Current cash flow

Evaluate your current income and expenses. Do you have enough regular income to cover your needs, or are you facing a temporary shortfall? If your cash flow is stable, you might be able to keep the bond to earn interest until maturity. If you have a consistent surplus, you may not need to tap into your savings bonds immediately.

Emergency fund or safety buffer

Ensure you have a robust emergency fund in place. This fund should cover 3-6 months of essential living expenses. Cashing a savings bond might seem like an easy solution for unexpected costs, but it’s better to use an emergency fund to avoid potential penalties or taxes on the bond redemption.

Debt and interest rates

Review any outstanding debts you have. If you have high-interest debt (like credit cards), it might be more financially beneficial to cash in your EE bond and pay off that debt. The interest you’re paying on the debt is likely higher than the interest your EE bond is earning. Check the official source or your provider for current debt interest rates.

Credit impact

Redeeming savings bonds generally does not directly impact your credit score. However, if you are cashing the bond to avoid defaulting on a debt or to pay for an emergency that would otherwise lead to missed payments, the decision can indirectly affect your credit.

Step-by-step (simple workflow)

Step 1: Determine if your bond is eligible for redemption.

• What to do: Check the issue date on your EE Savings Bond. Bonds can generally be redeemed one year after their issue date.
• What “good” looks like: Your bond is at least one year old.
• A common mistake and how to avoid it: Assuming all bonds are redeemable immediately. Always verify the issue date.

Step 2: Calculate the bond’s current value and maturity date.

• What to do: Visit the TreasuryDirect website or use their Savings Bond Value Calculator. You’ll need the bond’s serial number and issue date.
• What “good” looks like: You know the exact current redemption value and when the bond will stop earning interest (at 30 years).
• A common mistake and how to avoid it: Not realizing interest accrues for 30 years. Cashing it too early might mean missing out on significant growth.

Step 3: Understand the potential loss of interest.

• What to do: If you plan to cash the bond before it has been held for five years, be aware that you will forfeit the last three months of interest.
• What “good” looks like: You’ve factored this potential loss into your decision.
• A common mistake and how to avoid it: Cashing a bond just shy of the five-year mark without realizing you’ll lose a portion of the earned interest.

Step 4: Gather necessary identification.

• What to do: You will need valid identification, such as a driver’s license, state-issued ID, or passport.
• What “good” looks like: You have your primary identification ready.
• A common mistake and how to avoid it: Showing up to cash the bond without proper ID, causing delays.

Step 5: Complete the appropriate redemption form.

• What to do: The form needed depends on how the bond is held. For bonds registered in your name, you’ll typically use Form PD 1045, “Application for Redemption of U.S. Savings Bonds.” If the bond is electronic, you may be able to redeem it directly through your TreasuryDirect account.
• What “good” looks like: You have the correct form and have filled it out completely and accurately.
• A common mistake and how to avoid it: Using the wrong form or leaving sections blank, which will result in the form being rejected.

Step 6: Get your signature certified.

• What to do: Your signature on the redemption form must be certified by an authorized person. This can be a bank official, credit union official, or other authorized certifier. They will typically stamp or emboss the form.
• What “good” looks like: Your signature is properly certified on the form.
• A common mistake and how to avoid it: Having a signature that is not properly certified, leading to rejection of the redemption request.

Step 7: Submit the redemption request.

• What to do: For paper bonds, you will mail the certified form to the Bureau of the Fiscal Service. For electronic bonds, follow the redemption process within your TreasuryDirect account.
• What “good” looks like: Your request is sent to the correct address or submitted through the proper online portal.
• A common mistake and how to avoid it: Mailing the form to the wrong address or not following the specific instructions for electronic redemptions.

Step 8: Receive your funds.

• What to do: Funds are typically disbursed via direct deposit to your bank account or by check.
• What “good” looks like: You receive the redemption amount within a reasonable timeframe.
• A common mistake and how to avoid it: Not providing accurate bank account information for direct deposit, leading to delays or a mailed check.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Cashing before one year	Bond is ineligible for redemption.	Wait until the bond has been held for at least one full year.
Cashing between one and five years without awareness	Forfeiture of the last three months of interest.	Be aware of the five-year mark. If you need the funds before then, accept the interest forfeiture. If possible, wait until after five years to maximize earnings.
Not checking the maturity date	Missing out on potential interest earnings if cashed before 30-year maturity.	Use TreasuryDirect’s calculator to determine the maturity date (30 years from issue). Decide if holding until maturity is more beneficial than cashing now.
Incorrectly filling out the redemption form	Delayed processing or rejection of the redemption request.	Carefully read all instructions on Form PD 1045 (or the equivalent for electronic bonds) and fill out every section accurately. Double-check all personal information and bond details.
Signature not properly certified	Redemption request will be rejected.	Ensure your signature on the physical form is certified by an authorized official (banker, credit union official, etc.) as per the instructions. Electronic redemptions through TreasuryDirect bypass this step.
Not verifying identity properly	Redemption request may be delayed or denied.	Have your primary form of identification (driver’s license, passport) readily available and ensure it matches the name on the bond.
Redeeming bonds owned by a deceased person incorrectly	Delays and potential legal complications.	Follow the specific procedures for deceased owners, which often involve providing a death certificate and proof of authority (e.g., executor of the estate). Consult TreasuryDirect’s guidance or a legal professional.
Ignoring tax implications	Unexpected tax liability upon redemption.	Understand that interest is taxable when redeemed unless used for qualified education expenses. Consult a tax professional to assess your specific tax situation.
Not using TreasuryDirect for electronic bonds	Missing out on a simpler redemption process.	If your bonds are electronic, familiarize yourself with your TreasuryDirect account and use its built-in redemption features for a streamlined experience.
Forgetting about accrued interest on older bonds	Underestimating the bond’s value.	Always use a calculator to get the current value, as interest accrues over time. Do not just rely on the face value.

Decision rules (simple if/then)

• If your goal is short-term (under 5 years) and you need the cash, then cash the EE bond, because holding it longer may not align with your immediate financial needs.
• If you have high-interest debt (e.g., credit cards), then consider cashing the EE bond to pay it off, because the interest saved on the debt will likely outweigh the bond’s earnings.
• If your bond has been held for less than one year, then do not try to cash it, because it is not yet eligible for redemption.
• If your bond has been held for between one and five years, then assess if forfeiting the last three months of interest is acceptable, because you will lose this interest if you redeem.
• If your bond is approaching its 30-year maturity, then consider holding it until maturity, because it will have earned the maximum possible interest.
• If you need funds for qualified education expenses, then consider cashing the EE bond, because the interest may be tax-free under certain conditions.
• If you have a robust emergency fund, then you have more flexibility to wait for your bond to mature or reach a more favorable redemption point.
• If the bond is registered in the name of a deceased individual, then follow the specific procedures for deceased owners, because standard redemption rules do not apply.
• If you are unsure about the tax implications, then consult a tax professional, because tax laws can be complex and vary based on individual circumstances.
• If your bond is held electronically, then use your TreasuryDirect account to redeem it, because this is the most efficient method.
• If you need the funds for a non-essential purchase and your bond has been held for less than five years, then consider waiting to redeem, because you will earn more interest.
• If you have significant taxes due and are considering using bond proceeds to pay them, then evaluate if the tax liability outweighs the bond’s potential growth, and consult a tax professional.

FAQ

How long does it take to receive funds after cashing an EE bond?

Typically, it takes a few business days for direct deposit or a couple of weeks for a check to arrive after your redemption request is processed.

Can I cash an EE bond online?

Yes, if your bonds are held electronically in a TreasuryDirect account, you can redeem them directly through your account online. Paper bonds require a physical redemption process.

What if the bond is in my name and my spouse’s name?

You will need to follow specific procedures for jointly owned bonds, which may require both owners to sign and certify the redemption form, or present proof of survivorship if one owner has passed away.

Are there any fees for cashing EE bonds?

No, there are no fees charged by the U.S. Treasury for redeeming savings bonds.

What happens if I lose my paper EE bond?

If you lose a paper savings bond, you can file a replacement request with the Bureau of the Fiscal Service. You’ll need to provide as much information as possible about the lost bond.

Is the interest earned on EE bonds taxable?

Yes, the interest earned on EE bonds is subject to federal income tax. It is tax-deferred until redemption. State and local income taxes generally do not apply.

Can I redeem an EE bond for someone else?

Generally, no, unless you have legal authority, such as being a guardian, conservator, or executor of an estate, and can provide proper documentation.

What is the difference between paper and electronic EE bonds for redemption?

Paper bonds require completing a physical form, getting your signature certified, and mailing it. Electronic bonds are redeemed directly through your TreasuryDirect account, which is a simpler process.

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

• Specific tax advice for your individual situation. (Consult a tax professional).
• Legal guidance on estate settlements or guardianship. (Consult an attorney).
• Investment advice on whether cashing bonds is the best financial move for your portfolio. (Consult a financial advisor).
• Detailed instructions for every possible registration or ownership scenario. (Visit TreasuryDirect.gov).
• Information on other types of U.S. Savings Bonds (e.g., I Bonds, older series). (Visit TreasuryDirect.gov).