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Series Ee Savings Bond Redemption
Sue Said:Savings Bond Interest Deduction/Student Loan?
We Answered:The education tax exclusion permits qualified taxpayers to exclude from their gross income all or a portion of the interest paid upon the redemption of eligible Series EE and I Bonds issued after 1989. The bond owner must use the bonds to pay for qualified higher education expenses at an eligible institution.
Clifton Said:My bank won't cash my savings bonds series EE unless their a year old Is this legal?
We Answered:In a word, "yes". That's been the policy for quite a few years now. Any savings bonds bought in January, 2009 can't be redeemed until January 1, 2010 (or for all practical purposes until January 2, 2010 - the banks aren't open on New Year's Day). So you could buy a bond on January 31 and cash it first thing next year. See the attached link for the full redemption policy.
The other thing you should know is that any savings bonds that are redeemed before they are five years old will forfeit three months of interest as a penalty for early redemption. So even though you are allowed to redeem savings bonds after one year, you will pay a penalty to do so.
Willie Said:Can I redeem 30-year Series EE bonds a few years before they mature?
We Answered:Redeeming your Series EE bonds a few years before they mature is not a problem. There is only one requirement for these bonds: that you may not redeem them until 12 months after their issue date. It sounds like you have held them for well over 12 months, however.
After the initial holding period, you may redeem your savings bonds at any time. However, if you redeem Series EE Savings Bonds earlier than five years from the issue date, you pay an early redemption penalty equal to the last three months of earned interest.
In other words, by redeeming them early, you'll lose 3 months' of interest on them.
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