The funny thing about giving U.S. savings bonds as a gift for a child's birthday or other big event is that it doesn't hurt to nudge the child who turned into a grown-up and ask, hey, did you ever cash those bonds?
I ran into an odd situation with my niece this year. It's a story worth sharing if you happen to be one of those parents, grandparents, aunts or uncles who bought savings bonds for your little ones in the 1980s or earlier.
Billions of dollars in savings bonds have stopped earning interest but haven't been cashed. We're now talking about savings bonds issued in January 1984 and earlier that reached final maturity after 30 years.
Other bonds issued in 1984 will stop earning interest later this year, depending on what month they were issued.
Overall, the unredeemed number of savings bonds represents less than 1 percent of 5 billion matured savings bonds issued since 1941, according to David Starck, a spokesman for the Department of the Treasury, Bureau of the Fiscal Service.
Even so, who could complain if they were able to uncover $500 or $1,000 of their own bonds just somehow sitting there uncashed? Currently, there are about 47 million unredeemed matured savings bonds worth $16.1 billion.
A few months ago, I did my own bonds search via the U.S. Treasury Department website at www.treasuryhunt.gov. I took a look on the off chance that I lost some savings bonds of my own.
When you use Treasury Hunt, you plug in your Social Security number and other information online to find savings bonds that reached final maturity and are no longer earning interest. The Treasury Hunt program can find bonds that were issued in 1974 and after, not earlier. Social Security numbers were not required on bonds until 1974.
After I completed the Treasury Hunt, I was alerted via email that, yes, I had bonds that had matured. How much were they worth? I didn't know at this point.
To get more information, I'd have to file Form PD F 1048. It's not an overly cumbersome process and if there's money to be found, it's worth it.
About six weeks or so after the paperwork was sent, I received a phone call. Using my Social Security number, the Treasury tracked down that a gift bond existed under my number and someone else's name. The woman did not tell me the name on those bonds.
But I quickly guessed it had to be one of my sister's kids. I bought bonds in the past in the child's name and my sister's name.
After more research, our family pegged the uncashed bonds to a little girl who had a Holy Communion at St. Florian Church in Hamtramck, Mich., in 1983.
My niece, now a mother of two, had not cashed a group of her bonds that reached full maturity in 2013, or 30 years after she received those gifts.
Once I told her what I uncovered, she dug in her files and found the bonds. And she spotted other savings bonds, too.
She ended up looking at an unexpected windfall of $1,955.92 for four bonds bought in 1983 and a fifth bond bought in 1984 that will stop paying more money in interest in April.
A bond with a $500 face value in her group was worth $1,153.20 once she cashed it. She will need to pay federal taxes on $903.20 in interest on that one bond. The interest is exempt, however, from state and local income taxes.
What's the lesson here? It does not hurt to do a Treasury Hunt. It may be possible that you bought some bonds as gifts, and the bonds never got cashed 30 years or more later. It's OK to do such searches maybe once a year or so because bonds can show up as they reach their final maturity each month.
There's a chance that your search could turn up bonds you bought as gifts using your Social Security number.
“There's a lot of bonds out there with other people's Social Security numbers,” said Daniel Pederson, who has a Monroe-based blog about savings bonds at www.bondhelper.com.
That's because so many bonds were bought as gifts in years past. Decades ago, children didn't get Social Seucrity numbers at birth. And if the purchaser did not know the Social Security number of the designated owner or co-owner, the purchaser could have used his or her own number.
Or maybe a niece or nephew does not know that savings bonds will stop earning more interest. The Treasury didn't send my niece a notice last year. I've not received any notices on lost bonds, either. It's good to do those Treasury Hunts.
“A lot of people think bonds just earn interest for as long as you hold them,” Pederson said.
Some don't realize how much a savings bond is worth after all these years. Starck noted that the actual payout can range from three times to about nine times face value once some bonds reach full maturity.
A $100 Series E savings bond issued in January 1965 would be valued at $936.44 if cashed now, he said. Or an uncashed $100 Series E issued in May 1941 would be worth $362.36.
In my niece's case, the $100 Series EE bond that I bought her in April 1983 was worth $230.64 when she cashed it. I had paid $50 for that savings bond.
Series EE bonds were bought at half of the face value; but the earlier Series E bonds were bought at 75 percent of face value.
“We strongly encourage people who are holding savings bonds that are over 30 years old to redeem them so they can put their money back to work for them,” Starck said.
The next time you see a loved one, it might be a good time to ask, “Hey, did you ever cash those savings bonds?”
Contact the writer: firstname.lastname@example.org
>> If a lost bond pops up after a Treasury Hunt search, you'd need to submit a Form PD F 1048 to do more research. (You'd also need to file that form if you think you lost bonds issued in the 1940s, 1950s, 1960s or early 1970s, bonds that won't be found via Treasury Hunt.)
>> If you submit Form PD F 1048, which can be found at www.treasurydirect.gov, you will need to provide information about dates of purchase, names on bonds and other pertinent data. Most records for registered Treasury notes and bonds can be searched this way. Under the Privacy Act of 1974, if you are not listed on the bond as an owner or co-owner, the Treasury is limited in the additional information it can provide.
>> Talk to your family about savings bonds as gifts. Do your parents or grandparents still have any bonds that were given to you as a child? Ask family members if they'd be willing to do a search for any bonds they might have bought as gifts under their own Social Security number. Treasury can release information only to the rightful owner.
>> To learn how much a bond is worth, you can go to www.treasurydirect.gov and look up the redemption value. A savings bond holder can take the bond to a local financial institution to redeem for cash.
Source: Treasurydirect.gov and Detroit Free Press research