Series EE Savings Bonds

Series EE Savings Bonds Tax-Free Rollover to Education IRA 

The interest rate on Series EE US savings bonds are low

Many people have substantial assets locked up in Series EE US savings bonds, earning a very low interest rate.

In order to better the interest rates from Series EE US savings bonds, they may not want to diversify away from the savings bonds to get an enhanced rate of return because the growth in the Series EE US savings bonds will be taxed at ordinary income tax rates upon redemption.

Rollover Series EE US Savings Bonds proceeds into Educational IRA

But, they may be eligible to redeem the Series EE US savings bonds and roll the proceeds of the Series EE US savings bonds into Education IRA s for their children, if certain requirements are met.

The redemption of the Series EE US savings bonds will be tax free, and the growth in the Education IRA, as always, is tax free (not merely tax deferred), so long as the assets are used for qualified education expenses.

No more than $2000 may be contributed per year on behalf of any child.

Any Series EE US savings bond proceeds not rolled over into Education IRA s will be subject to tax.