Monday, July 15, 2013

Cashing in Paper Government Savings Bonds. What a Pain!

Over the years, our family has accumulated a number of savings bonds.  While this might sound like a good thing, many of these bonds are worth relatively little because they were childhood birthday or holiday gifts with low associated values.  This means that they got stashed away in the safe deposit box where they were safe and out of the way but not completely lost or forgotten about.

However, with cash flow low lately and interest rates on the bonds rather pitiful, I decided to cash some of them in.  I’d never done this before, and while I wasn’t looking forward to the process, I did my best to look at it as a learning experience.  I even took our five-year-old son along so he could see what it was like.  I’d heard stories about the process of cashing paper bonds being a tedious one; and afterwards, I realized why I’d been avoiding it.

Filling out the Bonds
The first step in the process -- after I retrieved the savings bonds from the safe deposit box -- was to fill out the information necessary on the back side of the bond.  I had to do this with each and every bond, 10 in total.  This information included a signature, my address, and Social Security number if it wasn’t on the front of the bond, which thankfully it was.  This took about five minutes and wasn’t that difficult.

Documentation
Thankfully, I had my bonds stored at and cashed them at a bank branch with which I do the majority of my banking.  It was also my correctly spelled first and last name as well as Social Security number on each of the bonds, which made my driver’s license and bank account the only information the bank representative needed to verify my ownership and begin the cashing out of the bonds.

However, should my last name have changed (as my wife’s has since she received her bonds), I didn’t have an account with the bank, the Social Security number on the bond(s) had been incorrect or other there had been other issues that made verification of bond ownership more difficult, I might have needed further documentation.  There is good information regarding what is (or might be) necessary for redeeming savings bonds at the government’s website at: www.treasurydirect.gov.

Pricing, Cashing and Tax Documentation
So next up in the cashing process, the banking representative had to put in the bond dates and serial numbers to get their exact worth since they had not yet hit full maturity yet.  I however was one step ahead, having already priced them on the Treasury Direct website’s Savings Bond Wizard ®.  This way I could ensure that the bank representative was getting the correct numbers.

Once the bank representative had verified and completed his side of signing off on the bonds, he provided me with documentation for my records of the transaction by way of a federal income tax information sheet that showed the redemption values, original cost, interest received and savings bond serial numbers.  This was the lengthiest portion of the process taking about a half hour.  Then I was issued credit to my account for the value of the bonds and I was on my way, having lost about an hour of my life in the process.

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