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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Series EE bonds are favored by parents who are saving for a child's college education, but there are pitfalls.
Series EE bonds issued on or after November 1, 1982, and held at least five years, earn interest at a variable, market-based rate, or a minimum rate, whichever is greater.
The accrued interest can be a substantial part of the value of Series E and EE bonds. Sec.
Government Series EE bonds that contain unrecognized interest income and installment notes receivable that contain unrecognized gain.
As discussed previously, Series EE bonds often are touted as the solution to a college fund but may not provide a sufficient yield.
Interest earned on Series I savings bonds is includable on federal income tax returns in the same way as Series EE bonds (see Q 1139).9 In general, owners may defer reporting the increment for federal income tax purposes until: (i) they redeem the bonds, (ii) the bonds cease earning interest after 30 years, or (iii) the bonds are otherwise disposed of, whichever is earlier.
While EE bonds are not expected to produce relatively high rates of return, they are insulated from losing value during a stock or bond market downturn.
Series E Bonds were originally issued at 75% of face value, after January 1, 1980; series EE Bonds were issued at a 50% discount.
The series EE bonds generally have such a low return that they are a poor choice for a college fund except for the most conservative investor.
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.
series EE bonds issued after 1989 or qualified U.S.
Qualified retirement plans, IRAs, investments within life insurance policies, Series EE bonds, deferred compensation plans and annuities are all tax-deferred.