What Is a Series EE Bond?
Let me explain what a Series EE Bond is. It's a non-marketable, interest-bearing savings bond issued by the U.S. government, often called a 'Patriot Bond.' You can count on these bonds to at least double in value over the usual 20-year initial term. Some of them keep paying interest beyond that original maturity, going up to 30 years from when they were issued. The coupon rates are set at issuance and based on a percentage of long-term Treasury rates.
How a Series EE Bond Works
Alongside Series I bonds, Series EE bonds are one of the two types of savings bonds from the US Treasury. You can't buy or sell them on the open market, so they're non-marketable securities. If you're looking at bonds issued after May 2005, they get fixed coupon rates twice a year—on May 1 and November 1—and those rates apply for the next six months. The value increases monthly, but interest is paid out semiannually.
These are ultra-safe, low-risk investments. The interest is usually exempt from state and local taxes, but you'll pay federal taxes in the year the bond matures or you redeem it. You can buy them if you're a U.S. citizen, official resident, minor, or U.S. government employee, no matter your citizenship.
Special Considerations
After the September 11, 2001, terrorist attacks, paper EE bonds were re-issued as 'Patriot Bonds.' They're exactly the same as regular paper Series EE bonds, except for the 'Patriot Bond' label printed on the certificate between the Social Security Number and issue date for bonds bought through financial institutions after December 10, 2001. Financial institutions don't issue paper Series EE bonds anymore, but you can still cash or convert existing paper Patriot Bonds to electronic ones.
One important note: you don't need to reissue Series EE bonds for small typographical errors in names, addresses, or Social Security numbers.
Requirements for a Series EE Bond
You need at least $25 to invest in an EE bond, and you can buy up to $10,000 worth per calendar year. Hold onto them for at least 12 months before redeeming, and if you cash in within five years, you'll lose three months of accrued interest. Since they earn interest for up to 30 years, the longer you keep them, the more they're worth.
Paper bonds were issued at 50% of face value, while electronic ones through TreasuryDirect are bought at full face value. But both are guaranteed to double in value after 20 years at the first maturity, and they pay interest the same way.
Key Takeaways
- Series EE Bonds are interest-bearing U.S. government savings bonds guaranteed to at least double in value over their typical 20-year initial terms.
- Some Series EE bonds pay interest beyond the original maturity date, up to 30 years from issuance.
- There is a $25 minimum investment requirement for EE bonds.
- Every investor may purchase up to $10,000 in these bonds each calendar year.
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