Fluent in Practice Management

The US Series i Savings Bonds are an inflation-driven savings bond and there are two components to calculating the interest rate. The first is just the normal fixed, market rate and right now that is zero. However, these bonds also have a rate driven by inflation, which resets semiannually, and the inflation rate is currently 6.89%. This rate applies for the first six months of ownership, and then resets. So, with little risk, you can get a 6.89% return on your money with Series i bonds.

We are not financial advisors, and we are not allowed to give investing advice. You and your advisor need to determine if these bonds are right for you.

A couple of things to keep in mind:

1. There is an annual maximum purchase limit of $10,000 per calendar year to purchase electronic bonds via the Treasury Direct Website. https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

2. You can also purchase an additional amount of paper bonds if you have a federal tax refund, up to $5,000. So, if you have a federal tax refund of $5,000 or greater, you can designate up to $5,000 of that refund to go towards the purchase of Paper i Bonds. NOTE: If you do have a federal refund and you want to use it to purchase i bonds, we need to know about this before we finish your 2022 tax return, so please tell us immediately.
   1. Keep in mind that these must be paper bonds. The government will send you paper. You can convert them to electronic, but it does require time and energy to go through that process.
   2. Also, keep in mind that this rate of 6.89% is good through April 2023 and then it will reset. If you purchase before the end of April, your rate, for 6 months, will be 6.89%, but then the next 6-month rate will be based on the rate that changes in May of 2023. The new rate could be higher because of high inflation, or it could be lower and could drop to zero. It is highly sensitive to monthly changes in the Consumer Price Index (CPI). Talk to your advisor.
   3. Additional information about rates and rates changes are available here: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#now

3. Other Rules and Considerations:
   1. Minimum term of ownership: 1 year
   2. Interest-earning period: 30 years or until you cash them, whichever comes first
   3. Early redemption penalties:
      1. Before 5 years, forfeit interest from the previous 3 months
      2. After 5 years, no penalty

4. Tax Considerations
   1. Savings bonds are exempt from taxation by any State or political subdivision of a State, except for estate or inheritance taxes.
   2. Interest earnings are subject to Federal income tax.
   3. Interest earnings may be excluded from Federal income tax when used to finance education (see education tax exclusions).

Again, we recommend talking to your advisor and let us know if you want to use your federal refund to purchase paper i bonds.