Savings Bond annual purchase limits reduced to $5,000
Monday, December 3rd, 2007
Categorized as: Savings Bond FAQ • Buying US Savings Bonds
The Treasury announced today that beginning January 1, 2008, the investment limits on Savings Bonds will be reduced from the current $30,000 per year to $5,000 per year. The limits apply to a single Social Security Number and to a single series and type of bond.
As before, an individual can purchase the $5,000 annual limit in both electronic EE and I bonds at TreasuryDirect and in both paper EE and I bonds for a total investment of $20,000. If a co-owner is named, the co-owner can still make his or her own investment, since the limit is tracked by the Social Security Number on the bond.
Series EE bonds are such a poor investment the Treasury is doing EE bond investors a favor by limiting the size of mistake they can make. However, I bond investors have typically made much larger investments, and this new limitation will hurt.
While those with larger amounts who want to invest in I bonds can invest in TIPS as an alternative, TIPS have two disadvantages compared to I bonds - the risk of capital loss (the value of TIPS can go down) and the lack of tax deferment. On the other hand, TIPS typically pay higher rates.
Because of this change, the Treasury will no longer issue the I bond in the $10,000 denomination.
There continues to be no limit on the total value of Savings Bonds one person may own or may convert from paper to electronic bonds in one year.