Many are reporting (1, 2, 3) on an email being sent out from US Treasury Direct encouraging people to send of their undelivered gift I Bonds now and not to wait. The treasury has confirmed the email is legit.
Contents
Background
We wrote about the I Bonds gifting loophole in this prior article. Basically it’s a way of locking in the current I Bonds rate for years to come, while waiting to deliver them in $10,000 increments to max out the annual I Bonds yearly limit.
Apparently it’s been an open secret that the $10,000 gifting limit is not actually enforced, meaning that you can gift someone $20,000 or $100,000, etc. You can also buy $10,000 directly and then immediately receive a gift for another $10,000 or $100,000 or whatever amount.
Some speculate that the gifting limitation verbiage (“Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient.”) is only meant to say that someone who has already received $10,000 in I Bonds gifts can no longer buy MORE. But that it was never meant to limit receiving I Bonds as a gift after having already purchased $10,000, and it never meant to limit the volume of I Bonds gifting.
The Email
In any case, the email is telling people to gift the I Bonds, and Treasury reps are telling people that changes are coming to I Bond gifting soon. Possibly they’re sunsetting the entire I Bonds gifting or changing limit or whatnot.
Reps are instructing people to gift their entire I Bonds stash now without limits and without waiting for the $10,000 limit to reset in January.
Personally, me and my brother have $10,000 locked in a previous high I Bonds rate and we’ve been gifting each other $10,000 each January with the older rate lock. I’ll wait until more info comes out before sending over the gift since I’m already maxed out with the $10,000 gift I received in January of this year.
I don’t mind waiting to learn more since I’m not buying more right now regardless. This news will matter more to someone who wants to lock in the 1.3%/1.2% fixed rates since the alleged unlimited gifting will make it possible to lock in an unlimited amount if you have a gifting partner. (Just be aware of the tax form reporting requirement.)
Hat tip to reader JD
View Comments (19)
@will @chucksithe
Not quite related to this post but it's the most recent TD post I can find: TD is no longer allowing ACH pushes in to their C of I (Certificate of Indebtedness) beginning Jan 31, 2025.
The C of I is just basically a non interest bearing account / "certificate" where you can hold your funds until you're ready to withdraw or reinvest. It's a useful DD tool in a pinch since you can cash out at anytime, once you have a balance, since there is no maturity date associated with it.
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I did last month to get the 1.3% fixed with the expectation that inflation would keep floating down, but if it increases, so be it. Also received the email referenced in this post asking me to deliver all gifts ASAP about a week after the purchases, and did so accordingly. There's speculation online that this will count against future years 10k limit, but that still remains to be seen.
Thanks. I posted this question on the wrong post so I moved it to a more pertinent thread.
I came across this excellent article on how to redeem i-bonds tax-free to pay your (or someone else) student loan https://thefinancebuff.com/cash-out-i-bonds-tax-free-college-529-plan.html
Super niche, love it. Very DoC :)
Lol, here's something even more niche but I'm sure applies to at least one or two DoC/ex-FWF readers:
https://tipswatch.com/2024/02/04/long-time-i-bond-investors-face-a-tax-time-bomb/
Are we talking about gifting to oneself here? Is that allowed?
No way to gift to self. Closest is P2 POD P1
Anybody knows if it's possible to change the recipient or your gift after you bought an I-Bond gift? I couldn't find a way to do it.
After more research I came to conclusion that it's impossible to change the recipient of your gift.
Hopefully ok to link to these:
https://tipswatch.com/2024/10/22/deciphering-treasurydirects-mysterious-gift-box-email/
https://www.bogleheads.org/forum/viewtopic.php?p=8095127
They're already hidden in the post :)
Oops. Got it, thanks! I’ve been following this email drama closely
I did not receive such an email. Why are they targeting only some?
People are being told it is being rolled out in waves. But who knows.
I wonder which hedge fund exploited this for great risk-free yield.
Kidding, since TD is for personal accounts only.
There was one person on TIPS Watch who created a dozen or so paper trusts when inflation was 9%+ to buy a six figure amount of I Bonds when inflation was high. Many people, myself included, activated a sole proprietorship account to get double the amount - in this case I already had business credit cards anyway and filed a Schedule C for some side hustle work so it wasn't a stretch at all.
No POD on some prop accounts
EDITED TO ADD: not planning on dying soon but 30 years is a long time who knows