Many people bought I Bonds as a gift and kept them for the future when I Bonds had a good interest rate last year. These bonds started earning the good rate while they were held in a “gift box.” They are eligible for delivery to the registered recipient now.
No Change in Terms
Delivering a gift bond moves the bond from one account to another. It doesn’t change the terms of the bond — how much interest the bond earns, when the bond can be cashed out, or when the early withdrawal penalty will stop. Those terms were set on the bond itself at the time it was originally purchased. The bond carries the same terms as it moves from one account to another. It doesn’t matter which account the bond resides in.
Limit Resets by Calendar Year
I Bonds received as gifts count against the recipient’s annual limit in the calendar year of receiving the delivery. Because the annual limit resets on January 1 each year, you can deliver a gift early in the year even though you bought it last October. You don’t have to wait 12 months.
Reason to Postpone
If the gift recipient wants to preserve the annual limit for their own purchase, they may want you to postpone the gift delivery but it doesn’t matter between spouses because you can always buy a new gift and hold it in the gift box again.
When you deliver the current gift and buy a new gift to replace it, the gift recipient has a bond and you have a bond in the gift box. If the gift recipient were to buy directly, the new bond has to wait 12 months before it can be cashed out, whereas the 12-month clock on the delivered gift bond already started last year.
Example: Suppose you bought one bond in your main account and another bond in your gift box for your spouse last year, and your spouse did the same. Your base plan is to repeat it this year — buy one bond in your main account and one for your spouse in the gift box. You’ll end up with two bonds in your main account and two bonds in your gift box.
Alternatively, you deliver the existing gift, receive a gift delivery, and buy two bonds for your spouse in the gift box. You’ll also end up with two bonds in your main account — one from last year, and one from receiving the gift delivery — and two bonds in your gift box. The difference is that the received gift delivery is eligible for cashing out sooner than the bond you would’ve bought directly.
Postponing delivery to preserve the annual limit makes sense only when you’re unwilling to buy a new gift.
Delivering the gift now clears the gift out of your gift box. It closes the loop. You will have one less thing hanging in the air. Unless you have a good reason to postpone, just deliver the gift and move on.
The principal value of the received gift counts against the recipient’s annual limit. The interest earned doesn’t count against the limit. You can deliver a $10,000 bond in full to the recipient even though the bond is worth more than $10,000 at the time of delivery because it earned some interest.
To deliver the gift, log in to your TreasuryDirect account and click on Gift Box on the right in the menu at the top.
Go into the bond in the list and click on Deliver. Choose the option “Deliver full amount.”
You need the recipient’s TreasuryDirect account number. The name on their TreasuryDirect account and the name on your gift must match exactly including the use of the middle initial versus the full middle name.
The gift bond moves into the recipient’s account as soon as you click on Submit to deliver the gift.
The rightful owner of the gift takes full control of it now. If you made yourself the beneficiary when you bought the gift, the owner can edit the registration to make you the second owner and grant you the transact rights now. Or they can put a different second owner or beneficiary on the bond. See How to Add a Joint Owner or Change Beneficiary on I Bonds and How To Grant Transact or View Right on Your I Bonds.
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