I Bonds – The Facts

Skybound Wealth USA advisors work with investors to create flexible plans that cater to more than just retirement needs based on an individual’s income, expenditure, and risk tolerance.

What are Series I Savings Bonds?

A U.S savings bond which protects against inflation. Backed by the U.S. government, I bonds are
seen to be relatively risk free.

Annual Purchase Limits

An individual can invest up to $15,000* each year (*$10,000 standard limit plus up to $5,000 if you receive a refund on your federal income tax return). If you purchase more than your allowance, a refund will be issued, usually within 16 weeks. Living Trusts and Business entities may also be
entitled to purchase.

Purchasing For Your Children

You can open an account for your child and purchase I bonds on their behalf. Interest from these bonds is tax-free if used for qualified higher education expenses.

How To Purchase

I bonds can be purchased either through the U.S. Treasury website in electronic form or in paper form using your federal income tax refund.

How They Work

I bonds earn interest in two ways:
A fixed rate of return which is set every six months by the Treasury and remains the same throughout the life of the I bond.

A variable inflation rate which is calculated twice a year and set in May and November. This rate is based on changes to the CPI-U for all items, including food and energy.

Interest is accrued and applied each month until you withdraw your investment or when the bond matures (30 years).

You must hold your investment for a minimum of 12 months before you are able to make a withdrawal. However, if the bond is less than 5 years old, your investment will be subject to a penalty charge equal to the last three months interest.

How Are They Taxed?

Interest earned on an I bond is subject to federal tax and is payable upon maturity in the tax year it is received. I bond growth is however exempt from state and local taxes.

Why I Bonds?

• A low-risk vehicle which helps protect your savings against inflation and a tax efficient way to supplement your retirement income.
• The combined rate (Fixed and Variable) could be lower than the fixed rate but will never be less than zero.
• Can be used to pay for your children’s education.
• Can be given as a gift.
• Useful for 1–4-year goals, excess cash, education, and alternative to overpaying low-interest loans.
• To learn more about I Bonds and determine if they’d be good for your financial situation, visit treasurydirect.gov and/or work with your financial professional.