The U.S. Department of Treasury announced today that the maximum purchase limit for Series I Savings Bonds (“I Bonds”) is set to $10,000 per person per calendar year, effectively immediately.
Previously the purchase limit was also $10,000 per person per calendar year, but it was $5,000 maximum for online purchases at TreasuryDirect and another $5,000 maximum in paper bonds. After the elimination of paper bonds sold at banks and credit unions effective in 2012, some investors were concerned that the move effectively cuts the annual purchase limit in half if the maximum for online purchases is left unchanged at $5,000. With today’s announcement, investors will have the same annual maximum purchase limit, albeit all in electronic format.
The announcement from the Treasury Department also confirmed once again the backdoor to additional $5,000 in paper I Bonds remains open.
“An investor still can purchase up to $5,000 annually in Series I paper savings bonds using his/her tax refund and IRS Form 8888.”
Since the real yields on TIPS maturing in up to 10 years are negative at this moment, I Bonds with a fixed rate of 0% plus variable inflation adjustments are a much better deal than TIPS under 10 years. Not only do I Bonds pay more, but they also have much less risk and more flexibility.
I will buy the maximum amount of I Bonds I’m allowed to buy around January 25. I will also use the backdoor for additional $5,000 when I file my tax return.
Hat tip to Nickel at Five Cent Nickel. For some reason I didn’t get the announcement email from Treasury.