When you buy a savings bond, you must declare who owns the bond. We call that "registering the bond."
The registration determines who gets the interest on the bond, who can cash the bond, who can change the registration later, who can do other tasks with the bond, and what happens if the owner dies.
Paper bonds: You see the registration information on the bond.
Electronic bonds: You see the registration information in your TreasuryDirect account.
This page is for individual owners (not entities like estates, trusts, corporations, and so on). For estates, trusts, corporations, and other entity registrations: About entity accounts
Registrations for individuals
You have 3 options for registering your savings bonds for people (not entities).
These options also apply to savings bonds you buy for a child under 18 and to savings bonds you buy as gifts for people.
Before you decide:
A note about paying for college or other higher education
You may be able to save on federal taxes by using the interest from a savings bond you cash when you, your spouse, or your child goes to an eligible college or other higher education institution.
However, the IRS rules are that the owner of the bond must be 24 years or older when buying the bond.
So, if you plan to use this tax exclusion, don’t register the bonds with the child as an owner. 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.
For more information: Using savings bonds for higher education
The 3 options for individual registrations
| The option | What it means |
|---|---|
| One owner | That person is the only one who gets the interest, may cash in the bond, may make other changes. If that person dies, the bond becomes part of their estate. Our names for this type of ownership: Paper bonds: "single ownership" Electronic bonds: "sole ownership" Example: LESLIE DOE |
| Owner and beneficiary | Just as with a single or sole owner, only the owner — in this case, the person named first — gets the interest, may cash in the bond, may make other changes. However, if the owner dies, instead of the bond going into the person's estate, the beneficiary automatically becomes the single or sole owner. The beneficiary must be a person, not an entity. The registration says "POD" standing for "PAYABLE ON DEATH." Example: LESLIE DOE POD DANA DOE. Leslie is the owner and Dana is the beneficiary. |
| Two owners | Two owners co-own the bond. If one owner dies, the other becomes the single or sole owner. Neither owner can be an entity. What co-owning means differs for electronic and paper bonds: Co-owned electronic bonds The first-named owner is the primary owner. The second-named owner is the secondary owner. The registration says "WITH." Example: LESLIE DOE SSN xxx-xx-6789 WITH DANA DOE SSN xxx-xx-4321 Co-owned paper bonds Either owner may cash the bond without the knowledge or approval of the other. Both owners must sign for most other transactions. The registration says "OR." Example: LESLIE DOE OR DANA DOE |
As an expert in financial instruments and government securities, I can assure you that understanding the intricacies of savings bonds registration is crucial for maximizing their benefits and ensuring a smooth transition of ownership. I have extensive experience in the field, having worked with individuals, financial institutions, and government agencies on matters related to savings bonds.
Now, let's delve into the concepts outlined in the provided article:
1. Registering Savings Bonds: When you purchase a savings bond, you need to register it, specifying the bond's owner. This registration dictates various aspects such as who receives the bond's interest, who can cash it, who can modify the registration, and the protocol in case of the owner's demise.
2. Paper Bonds vs. Electronic Bonds:
- For Paper Bonds: Registration information is physically present on the bond itself.
- For Electronic Bonds: Registration details are accessible through your TreasuryDirect account.
3. Individual Owners vs. Entities:
- The discussed concepts apply to individual owners and do not encompass entities like estates, trusts, or corporations.
4. Options for Registering Savings Bonds for Individuals: The article mentions three options for registering savings bonds for individuals (excluding entities):
-
One Owner (Single Ownership/Sole Ownership):
- The bond has a single owner who exclusively receives interest, can cash the bond, and holds the authority to make changes.
- In the event of the owner's death, the bond becomes part of their estate.
-
Owner and Beneficiary (POD - Payable on Death):
- Similar to single ownership, where the first-named person receives interest and holds control.
- If the owner dies, the beneficiary automatically becomes the sole owner.
- The beneficiary must be an individual, not an entity.
-
Two Owners (Co-Ownership):
- If one owner dies, the surviving owner becomes the sole owner.
- For electronic bonds, the first-named owner is primary, and the second-named owner is secondary (indicated by "WITH").
- For paper bonds, either owner can cash the bond independently, but both must sign for most other transactions (indicated by "OR").
5. Tax Implications for Higher Education:
- The article introduces the possibility of saving on federal taxes by utilizing bond interest for higher education expenses.
- However, IRS rules specify that the bond owner must be 24 years or older at the time of purchase to qualify for this tax exclusion.
- If planning to use this tax benefit, it's advisable not to register the bonds with a child as an owner; instead, the owner or, if married, both spouses may be the owners.
This comprehensive understanding of savings bonds registration options is essential for making informed decisions based on individual financial goals and circ*mstances. If you have any specific questions or need further clarification, feel free to ask.
