Treasury Direct?
Treasury Direct?
I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.
Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?
Thanks.
Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?
Thanks.
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Re: Treasury Direct?
I just bought 20k of I Bonds (for me and my wife) back in May for the exact same reasons you are mentioning. I couldn’t stand my Emergency fund earning next to nothing in my savings account. I still have a decent chunk of cash that I can access currently; but I plan on buying more I Bonds in 2022 with some of this cash as my one year hold period will expire for my 2021 up purchase. It was pretty easy to set up an account and didn’t take long at all. The money transfer went pretty quick too. If I remember correctly, the funds were withdrawn the next business day after I submitted the purchase. The Treasury Direct website isn’t the prettiest website but it does get the job done.
Re: Treasury Direct?
After transferring $10k, I'll still have an adequate emergency fund in my checking. I'm good maxing out around $30k in I Bonds over three years. I can't see having more than that with these low returns.TarHeel2002 wrote: ↑Fri Jun 11, 2021 9:29 pm I just bought 20k of I Bonds (for me and my wife) back in May for the exact same reasons you are mentioning. I couldn’t stand my Emergency fund earning next to nothing in my savings account. I still have a decent chunk of cash that I can access currently; but I plan on buying more I Bonds in 2022 with some of this cash as my one year hold period will expire for my 2021 up purchase. It was pretty easy to set up an account and didn’t take long at all. The money transfer went pretty quick too. If I remember correctly, the funds were withdrawn the next business day after I submitted the purchase. The Treasury Direct website isn’t the prettiest website but it does get the job done.
Have you ever redeemed one? How does that process work?
Re: Treasury Direct?
Buying is easy. Redeeming is easy. There are transaction costs. There is no bid-ask spread. It is a no-brainer. Please note that if you sell it in 12 months, you'll only get 9 months of interest. I think you'll like it and keep using it.
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Re: Treasury Direct?
Hi, You mention it will be a transition cost for redeem bonds? How much? What about tax for interest? Thanks in advance.
Re: Treasury Direct?
I think he meant no transaction costs, missed the "no".
The tax on interest can be deferred until the year you actually redeem the bond, or 30 years, whichever occurs first.
Last edited by lakpr on Fri Jun 11, 2021 10:21 pm, edited 1 time in total.
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Re: Treasury Direct?
Some people report having to mail in a form with a signature guarantee to open up/unlock their account. My spouse and I never had this issue. We have been buying I Bonds since last year. Our accounts each got locked once, but we were both able to unlock over the phone.rockstar wrote: ↑Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.
Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?
Thanks.
Re: Treasury Direct?
I had no issue setting up an account. Did one for myself and one for our trust with intention of funding in May. About two weeks after creating the accounts I tried logging in and both accounts were locked. I phoned TD and they said I needed a signature guarantee or medalliom signature to verify my identity. That required downloading a form from their website, filling it out, visiting a bank, maing it back to TD, and waiting for them to verify and unlock my accounts. This was a little frustrating since there's a lot of wasted time throughout that process and it couldn't be done online. About a month later, got an email that accounts were unlocked and good to go.
I'll note that my circumstance is not ordinary, but it has happened to others. I still don't know what caused the lock in the first place. Also not sure why the process to verify is so manual (download form, drive to bank, snail mail it back). In today's day and age, this should be streamlimed.
As for ibonds, my reasons are same as yours. I have some extra cash in the emergency fund that could use some better yield. I'm fine with the year lock up. I like that these are inflation protected, exempt from state taxes (which are high in California) and tax deferred. I plan on continually buying each year until my entire emergency fund is in ibonds. I might even continue if I want to build some extra cash up pre retirement to be able to whether a down year or two in the market.
I'll note that my circumstance is not ordinary, but it has happened to others. I still don't know what caused the lock in the first place. Also not sure why the process to verify is so manual (download form, drive to bank, snail mail it back). In today's day and age, this should be streamlimed.
As for ibonds, my reasons are same as yours. I have some extra cash in the emergency fund that could use some better yield. I'm fine with the year lock up. I like that these are inflation protected, exempt from state taxes (which are high in California) and tax deferred. I plan on continually buying each year until my entire emergency fund is in ibonds. I might even continue if I want to build some extra cash up pre retirement to be able to whether a down year or two in the market.
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Re: Treasury Direct?
Is there any other way to buy them?
Re: Treasury Direct?
Yes. Please see IRS form 8888 (and instructions) for details.
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Re: Treasury Direct?
people sometimes complain about treasurydirect.com but my experience has been just fine.
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Re: Treasury Direct?
The only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .
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Re: Treasury Direct?
My recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
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Re: Treasury Direct?
Some have reported that any hitch or miscalculation will void the purchase and there's no recourse.WolfgangPauli wrote: ↑Sat Jun 12, 2021 4:32 pm The only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .
Re: Treasury Direct?
I was amazed but money was pulled from bank the morning of my order date. Quickest order execution I have ever seen.RubyTuesday wrote: ↑Sat Jun 12, 2021 4:58 pmMy recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
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Re: Treasury Direct?
^^^This is what I experienced last month.bengal22 wrote: ↑Sat Jun 12, 2021 5:03 pmI was amazed but money was pulled from bank the morning of my order date. Quickest order execution I have ever seen.RubyTuesday wrote: ↑Sat Jun 12, 2021 4:58 pmMy recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
Re: Treasury Direct?
Based on the types of questions, I believe a lot of these sites that verify your identity by asking those "which of these streets has an association with you" or "how much is your monthly mortgage payment" or "with which of these creditors did you have a car loan opened in 2013" are pulled from your credit report. If your credit is frozen, or there simply isn't enough information in your credit report to generate the questions, I think that triggers TreasuryDirect to force the signature guarantee form to open the account. The same thing seems to happen sometimes when minors/18 year olds try to open their first Roth IRAs online.anon_investor wrote: ↑Fri Jun 11, 2021 10:19 pmSome people report having to mail in a form with a signature guarantee to open up/unlock their account. My spouse and I never had this issue. We have been buying I Bonds since last year. Our accounts each got locked once, but we were both able to unlock over the phone.rockstar wrote: ↑Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.
Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?
Thanks.
Re: Treasury Direct?
File Form 4868 and submit extra payment with an automatic extension to effect a refund. You can do it using IRS Direct Pay. Then file the taxes with Form 8888 with the refund going to I bonds.WolfgangPauli wrote: ↑Sat Jun 12, 2021 4:32 pmThe only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .