Series EE Bonds

Series EE bonds are a type of low-risk, fixed-income investment issued by the US Treasury Department. Like all bonds, Series EE savings bonds represent a form of debt. In this case, the borrower is the federal government, and the lenders are the investors who purchase the bonds. Each Series EE bond is basically an IOU document, containing important details about interest rates and payment schedules.

You can buy Series EE savings bonds directly from the US Treasury. They come in two varieties: Traditional Paper Series EE Savings Bonds and Electronic Series EE Savings Bonds, which are available for purchase online. Paper bonds are sold at half of their face value. For example, you would pay $100 to buy a $200 paper bond. Electronic Series EE Savings Bonds sell at face value, so you would need to spend $200 to purchase a $200 Electronic Series EE Savings Bond.

Who buys Series EE savings bonds?
People often purchase Series EE savings bonds to use them as gifts for others. For example, it's a tradition in some families to purchase a Series EE bond for each new baby born. These bonds are also popular gifts for graduates, newlyweds and grandchildren celebrating birthdays.

But ownership of Series EE bonds is not limited to individuals. Public organizations, private groups, corporations and banks are all entitled to purchase and own paper bonds. It's also worth noting that minors can purchase Series EE bonds, while many other securities require individual buyers to be adults.

If you want to buy Series EE bonds, you'll need to provide your Social Security number. Generally speaking, you'll also need to provide proof of residence in the United States. US citizens living abroad who can provide a US address of record are also eligible to purchase the bonds. Civilian employees of the US government can buy Series EE bonds no matter where they maintain their legal residence.

Buying Series EE bonds
As of January 1, 2008, the annual purchase limit for Series EE Savings Bonds is $5,000 per person. (You can still buy $10,000 worth of paper bonds since paper bonds are bought at half their face value.) This is down from a $30,000 annual limit that had been in place since 2003. Rules regarding the denominations and prices vary depending on the type of Series EE bonds you buy.

Paper Series EE Savings Bonds are available in denominations of $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000. Electronic Series EE Savings Bonds are available in any denomination of at least $25. In other words, as long as you buy at least $25 worth of Electronic Series EE Savings Bonds, you can spend whatever you like between $25 and $5,000.

To buy Series EE Savings Bonds online directly from the US Treasury, go to http://www.savingsbonds.gov/. You can also buy the bonds from banks or through a payroll savings plan if you are eligible to participate in one sponsored by your employer.

Redeeming and replacing Series EE bonds
Series EE Savings Bonds are redeemable 12 months after you buy them. Generally speaking, you will receive a payment equal to the amount of your purchase plus any interest earned by the bonds. However, you will lose three months of interest payments if you choose to redeem Series EE bonds before they are five years old. The exact value of your bonds will be determined by the amount of time you owned them and the interest rate they paid. Series EE bonds purchased before May 1, 2005, pay a variable rate of interest. Bonds issued after that date pay a fixed rate of interest, which is calculated on May 1 and November 1 of each year.

If your Series EE bonds are stolen, lost, damaged or never delivered, you have the right to replace them. In order to replace Series EE bonds that were lost or damaged after you received them, you'll need to complete Treasury Department Form #PD F 1048 ("Claim For Lost, Stolen or Destroyed United States Savings Bonds") and mail it to the Bureau of the Public Debt, P.O. Box 7012, Parkersburg, WV 26106-7012.