Gyroscopic Investing

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I saw that.

Paper savings bonds will now have additional value as collector's items.

Load up while you still can folks.

Does this mean I have to start a treasury direct account for myself?

ahhrunforthehills wrote:This will likely cut the maximum you can invest in I Bonds going forward for those who were purchasing $5k  at treasury direct and another $5k at your local bank

I'm not 100% convinced that they are going to cut the overall maximum down to $5,000 per person now that the paper bonds aren't being sold anymore. The whole reason they made you purchase $5,000 of paper and $5,000 of electronic bonds separately was because the backend of the system they used to issue the electronic bonds didn't talk to the system they used to issue the paper bonds. So, there was no way to keep track of who was hitting their maximum between the two systems without keeping them separate and enforcing separate maximums.

Once paper bonds are removed from the equation, I'd be shocked if they don't increase the maximum of the electronic bonds to $10,000 — particularly since the electronic versions are so easy to produce.

Gumby wrote:

ahhrunforthehills wrote:This will likely cut the maximum you can invest in I Bonds going forward for those who were purchasing $5k  at treasury direct and another $5k at your local bank

I'm not 100% convinced that they are going to cut the overall maximum down to $5,000 per person now that the paper bonds aren't being sold anymore. The whole reason they made you purchase $5,000 of paper and $5,000 of electronic bonds separately was because the backend of the system they used to issue the electronic bonds didn't talk to the system they used to issue the paper bonds. So, there was no way to keep track of who was hitting their maximum between the two systems without keeping them separate and enforcing separate maximums.

Once paper bonds are removed from the equation, I'd be shocked if they don't increase the maximum of the electronic bonds to $10,000 — particularly since the electronic versions are so easy to produce.

I wouldn't be shocked if they didn't, but I tend to agree with you.  Everything considered (administrative costs, the relative stability of peoples holdings, etc.) it would make sense from the Treasury's perspective to adjust the maximum upward.

One of the news reports said that paper bonds would still be available, but only as an option for tax refunds.

smurff wrote: One of the news reports said that paper bonds would still be available, but only as an option for tax refunds.

Thoses are the ones that will be collector's items.

6 years ago or so you could buy $30k of ibond thru treasury direct...

It's too bad the Treasury did not think creatively about their decision to end paper bonds.  They complained about the costs. They could have enlisted the Post Office to sell the bonds over the counter as they do with money orders. Many countries allow their residents to invest in gov bonds through deposits into accounts at national post offices. The USA also did so decades ago.  The post office could collect a modest fee like they do for money orders.  They could also cash the bonds.  They could have issued special Roth IRA I-bonds.  I guess government agencies and departments don't think outside their own boxes anymore.

I just hate the idea of certain things not having verification on the issuing organization's own paper stock.  Something tells me that only offering totally electronic records for financial transactions of any significance is, under current circumstances, a disaster about to happen.

Sorry, I forgot that the federal government is owned by the big banks. Everything they do regarding financial instruments and investments is intended to push taxpayer, business, and individual money through the banking system.

smurff wrote: It's too bad the Treasury did not think creatively about their decision to end paper bonds.  They complained about the costs. They could have enlisted the Post Office to sell the bonds over the counter as they do with money orders.

The I-Bond program loses money for the Treasury. That's why they limit it to $5k per year. Because it's losing them money.

The Post Office is losing billions of dollars of year. Apparently it's not a sustainable business model to pay people $60k per year plus pensions and full benefits to do the level of work that private enterprise pays $10/hour for with no benefits.

Considering how moronic Congress is, I'm actually a little surprised they didn't team up the money-losing Savings Bond program with the money-losing Post Office. 

TripleB wrote:

smurff wrote: It's too bad the Treasury did not think creatively about their decision to end paper bonds.  They complained about the costs. They could have enlisted the Post Office to sell the bonds over the counter as they do with money orders.

Apparently it's not a sustainable business model to pay people $60k per year plus pensions and full benefits to do the level of work that private enterprise pays $10/hour for with no benefits.

great work if u can get it

TripleB wrote: Considering how moronic Congress is, I'm actually a little surprised they didn't team up the money-losing Savings Bond program with the money-losing Post Office. 

You have a good point.  Maybe it's time for the Post Office to go bankrupt for real.  Just like American Airlines.

TripleB wrote:
The I-Bond program loses money for the Treasury. That's why they limit it to $5k per year. Because it's losing them money.

I hoped that they would up the minimum for electronic I bonds per person to 10K in 2012, but given no announcement this late in 2011, I am forced to consider polygamy as means of maintaining our annual allocation. Now, I just need to ask 6 Ironette.

TripleB wrote:Considering how moronic Congress is, I'm actually a little surprised they didn't team up the money-losing Savings Bond program with the money-losing Post Office. 

Actually they used to do this:

I just confirmed with the Bureau of Public Debt that paper I bonds received as a tax refund do not count toward the 5K/person electronic limit. I had assumed that, but wanted to make sure.

Hello,

As long as the bonds purchased using the Tax Time Bond Program are paper bonds they will not be applied to the purchase limit of $5,000 for electronic savings bonds.

Sincerely,

S. B.
Customer Service Representative

6 Iron wrote: I just confirmed with the Bureau of Public Debt that paper I bonds received as a tax refund do not count toward the 5K/person electronic limit. I had assumed that, but wanted to make sure.

Hey, this is really interesting.  Does this open up a potential loophole for acquiring a virtually unlimited quantity of I-bonds?

6 Iron,

You may have made my 2011.

http://www.irs.gov/pub/irs-prior/f8888--2010.pdf

It would appear that Form 8888 will only allow $5,000 in I-bonds, even if you are filing jointly.  I don't find anything that explicitly says this $5,000 purchase doesn't count towards your $5k per person annual limit, but 6 Iron appears to have covered that.

I think the big mystery is how they're going to handle the limits (and 20-yr EE bond doubling) of electronic bonds going forward, and how the 8888 filing will be able to possibly increase your limit.

Gift purchases in TreasuryDirect count toward the annual limit of the recipient in the year they are delivered.

This is from the Treasury Direct FAQ.  Dangit.

There's a way to scam this system... I can feel it.  The closest thing I can think to do is put them in your kids' names if you trust that situation.

moda0306 wrote: It would appear that Form 8888 will only allow $5,000 in I-bonds, even if you are filing jointly.  I don't find anything that explicitly says this $5,000 purchase doesn't count towards your $5k per person annual limit, but 6 Iron appears to have covered that.

Aha, you're right!  Ah well, another $5k is at least an interesting option.

I'm also not surprised that the I-bond gifts count toward the annual gift limit.  Even 529 contributions count toward that so this fits with what I've seen.  Glad you checked on that, though, because there's always the potential for surprises.

moda0306 wrote:

Gift purchases in TreasuryDirect count toward the annual limit of the recipient in the year they are delivered.

This is from the Treasury Direct FAQ.  Dangit.

There's a way to scam this system... I can feel it.  The closest thing I can think to do is put them in your kids' names if you trust that situation.

What's not to trust?  Are you worried that little Johnny will blow it all on hookers and booze when he turns 18? 

I think iBonds are a very good vehicle for college savings accounts.  I believe you can even cash them in tax free to pay for college.

moda0306 wrote: http://www.irs.gov/pub/irs-prior/f8888--2010.pdf

It would appear that Form 8888 will only allow $5,000 in I-bonds, even if you are filing jointly.  I don't find anything that explicitly says this $5,000 purchase doesn't count towards your $5k per person annual limit, but 6 Iron appears to have covered that.

I think the big mystery is how they're going to handle the limits (and 20-yr EE bond doubling) of electronic bonds going forward, and how the 8888 filing will be able to possibly increase your limit.

This is very interesting and useful information, Moda.

So, a family of 4, if they managed their tax witholdings to ensure that at least $5K extra was withheld, could theoretically invest in year 2012:

• $5,000 for Father's TreasuryDirect IBond.
• $5,000 for Mother's TreasuryDirect IBond.
• $5,000 for Child #1's TreasuryDirect IBond.
• $5,000 for Child #2's TreasuryDirect IBond.
• $5,000 for Form 8888 refund TreasuryDirect IBond.

Total of $25,000 available IBond purchases.  I think that space more than covers most families in the PP.  In fact I wish I could save $100,000 a year so I had to use all that space... 

In the UK, the limit for our NSI ILSC (like ibonds) is £15k for each person over 7years old (but they only offer them some of the time).

A HIGH RATE DEADLINE LOOMS  (Wall Street Journal)

http://online.wsj.com/article/SB1000142 ... ings+bonds