Series EE savings bond

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Series EE Savings Bond

In the United States, a savings bond, exempt from state and local taxes, with a fixed interest rate. The interest is adjusted every six months and is equal to 90% of the average 5-year Treasury security yield over the six months preceding the calculation. These bonds are sold at half of face value and pay par upon maturity, which is 30 years after purchase. They must be held for at least one year, and United States Treasury guarantees that it will double in value after 20 years. They are non-transferable and must either be held or redeemed. When used to pay for college education, they are exempt from federal taxes. Series EE bonds are the successors to Series E bonds, better known as war bonds.

Series EE savings bond

A U.S. Treasury obligation that pays a variable interest rate and is sold to investors in denominations as low as $50 at a 50% discount from face value. Series EE bonds earn interest at 90% of the average yield on five-year Treasury securities for the previous six months. Bonds may be redeemed after six months early, but a three-month interest penalty is assessed for redemptions during the first five years. Federal income taxes on interest earned may be paid each year or may be deferred until the savings bond is redeemed. Interest earned on savings bonds is exempt from state and local taxation. See also Patriot Bond.
References in periodicals archive ?
Arak and Rosenstein (2004) compared Series EE bond returns to six-month certificates of deposit (CDs), Treasury Bills and intermediate-term Government bonds over the period 1954 to 2000.
And he'll be able to take advantage of it in the future,'' said Tuszynski, 38, who plans on purchasing a Series EE bond for $25, which the U.
In the past EE bond owners could defer reporting their interest income beyond the normal maturity date by exchanging their EE bonds for HH bonds.
income tax liability (2) $1,481 Overall tax savings (1) This example assumes that the total interest of $5,000 is earned on a 10-year Series E or EE bond and an equal amount of interest would be recognized annually on the individual return.
A $50 EE bond sells for $25, then gradually matures to $50 or more.
Since the introduction of the series EE bond in 1980, more than 50 million investors have purchased them.
The EE bond interest exclusion is phased out by a modified AGI limit.
With the smallest denomination of a Series EE bond selling for just $25, they've been a popular savings vehicle for children's college education or as holiday and birthday gifts for young relatives.
As a trade-off, however, the EE bond yield is only 85% of the market yield on five-year Treasury securities if the EE bonds are held at least five years.
135 AGI limits will reduce their future Series EE bond exclusion benefit if they continue to hold the bonds.
The Series EE bond is an appreciation-type security that accrues interest for 30 years.