Is it possible to deposit un-cashed savings bonds into a CD or an IRA?
by admin ~ July 16th, 2008 . Filed under: Personal Finance .
Toni asked:
Basically I want to put them into a long term savings plan but I do not want to cash them yet because they have not matured.
Adam Hickle
Basically I want to put them into a long term savings plan but I do not want to cash them yet because they have not matured.
Adam Hickle
July 17th, 2008 at 12:04 pm
Not without cashing them first.
July 19th, 2008 at 6:09 am
Savings bonds ARE a long-term savings instrument. However, in order to reinvest the funds (and pay whatever taxes are due on the interest) they must be cashed. Because of the potential income tax impact of cashing this type of investment, you need to find out ahead of time what the tax impact will be. You also don’t say which series your bonds are.
I got first-hand experience with these things. My parents had thousands in savings bonds. When I became their conservators, I was faced with setting up a system of liquidation as they were near maturity. I needed to time the redemptions so that they didn’t all get cashed in one year. Even then, we sent really big checks to the government because their value was in the interest that had accumulated - all of it taxable! They can be a real tax bomb waiting to explode upon redemmption, esp. if they sit around for 40 years like my parents’ bonds did.
July 21st, 2008 at 5:43 pm
They must be redeemed first for whatever value they have accrued.
You can purchase bond funds with the cash once its deposited in your IRA or CD.. but you do have to redeem the hard-copy bonds you have to do so…