Nice logic and calcs to back it up. I’m holding my I-bonds and am purchasing more of the 1.3s … at the end of the month. 
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TIPS vs I Bonds
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From the Tipswatch article, this makes sense to me since I have some zeros that are over five years.
The rollover strategy
If you are holding I Bonds with 0.0% fixed rates, you are currently earning a composite rate of 3.94%. You could redeem some of those now, park the cash in a money market account paying close to 5%, and then in April use that cash to buy I Bonds with a 1.3% fixed rate.
I generally encourage people to continue holding I Bonds “until you need the cash.” It’s great to have these savings bonds growing tax-deferred with zero risk. But this strategy of rolling over 0.0% I Bonds for a 1.3% fixed rate makes sense.
It makes sense even if they’re not over or close to five years old. The break-even for the 3-months penalty is measured in months.
I decided I didnt want to hold all my I bonds, but I wanted to keep a little. So I still sold all my current bonds (0% fixed rate) and are the penalty, then immediately bought a fresh 1.3% I bond (well, it’ll be purchased at the end of the month). I’ll break even from the penalty after ~9 months. Only downside is a new 1-year minimum hold period, but I figure I may sit on these long term so that isnt a problem.
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Exactly. I sold mine too, but kept some in minor’s account due to lower kiddie tax making them worth more, but I will “upgrade” those to the new fixed rate too.
I sold all my 0% fixed rates I-bonds as well. Rolled them into 13-week T-bills until April at today’s auction. Then I’ll likely purchase enough gifts to park the proceeds in I-bonds. It’ll only be a very small portion of my fixed income stuff but likely to want to keep these 1.3% for the long haul. Just to not put all my eggs in the same CD/TIPS/Bonds basket.
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Good explanation about finding, downloading and deciphering the treasury direct 1099.
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Perhaps worth noting, if you have trust account(s), each account will have their own 1099 even when under the same SSN.
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Good pount. I have two accounts: the main one and a transfer account that was opened when I mailed in some paper bonds. The 1099 was issued for the transfer account and not visible on the main account.
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5/1/24 new rate is 4.28% that includes a fixed rate of 1.3%.
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The U.S. Department of the Treasury has announced new Series I bond rates.
Linked to inflation, newly purchased I bonds will pay 3.11% annual interest from November 1 through April 30, 2025, which is down from the 4.28% yield offered since May and the 5.27% yield rate offered in November 2023.
The new rate includes a variable portion of 1.90% and a fixed portion of 1.20%. The fixed rate is down from 1.3% announced in May.
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No paper bonds so no extra from the refunds
Extra I Bond Purchases Now Blocked
Another change for tax filers is you can longer use your return to buy up to $5,000 in extra Series I savings bonds, beyond the $10,000 annual limit.
Previously, filers could tell the IRS they wanted to use part or all of their tax refund to purchase I bonds, a savings tool designed to protect Americans’ savings from rising prices. That brought the yearly purchase limit to $15,000 for individuals or $25,000 for married couples filing jointly.
However, the Treasury’s elimination of paper I bonds means the IRS can no longer mail purchases to tax filers and savers can only purchase I bonds through the TreasuryDirect system.
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I mentioned this in the bonds thread also, but it is anyone buying before the cutoff (not sure if that’s today or tomorrow, April 29)?
They look appealing again to me.
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