Buy I Bonds in a Child's Name: You Can, But Should You? (2024)

FAQs

Can you buy I-bonds in a child's name? ›

We currently sell 2 types of savings bond: Series EE and Series I. You can buy them for yourself, your child, or as a gift for someone else.

But many investors will tell you that they aren't just another investment, they're a gift that keeps on giving. These bonds adjust for inflation every six months, making them an ideal investment that grows over time to provide a stable financial backing for a child or grandchild.

The minimum age required to open a Primary TreasuryDirect account is 18 years. A parent, natural guardian, or person providing chief support may establish accounts for minor children under the age of 18.

The cons of investing in I-bonds

There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.

You can buy inflation-protected Series I bonds in a child's name. The amount you can purchase electronically for anyone, including a child, is capped at $10,000 per person per calendar year. The interest earned on I bonds is subject to federal taxes in most cases, but not state or local taxes.

A series I bond is a non-marketable, interest-bearing U.S. government savings bond. Series I bonds give investors a return plus inflation protection on their purchasing power and are considered a low-risk investment.

Does it matter whose social security number is on a savings bond? ›

Do the address and Social Security Number on the bonds have to match the customer's address and Social Security Number? Not necessarily. The customer may have moved or the bonds may have been a gift and contain the purchaser's information.

Reporting the interest every year

For example, you may find it advantageous to report interest every year on savings bonds in a child's name. The child may be paying taxes at a lower rate than will be true years later when the bond matures.

For an estate that is being administered, the legal representative of the estate must open a TreasuryDirect account in the name of the estate in order to conduct transactions. The legal representative of the estate may then conduct any transactions that are available to an individual account owner.

You just bought a security from the U.S. Treasury. Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for Bills, Notes, Bonds, FRNs, and TIPS.

The owner of the reissued EE or I bond must have an account in our online program, TreasuryDirect. We reissue EE and I savings bonds only in the name of the owner. Later, the owner may add a secondary owner or beneficiary.

Requirements for cashing in a child's savings bond

For paper bonds, the Treasury allows parents to redeem a child's bonds if two conditions are met. First, the child must be too young to sign the request for payment. Second, the child must live with the parent, or the parent must have legal custody of the child.

There are no asset protection allowances for money in the child's name. Money in the child's name is legally the property of the child, so the child could spend it on whatever they want when the reach the age of majority.

You must be the owner or, if you are married, you may make yourself and your spouse the owners. To use the exclusion, the child may be a beneficiary but cannot be the owner or co-owner of the bond.