Treasury Inflation-Protected Securities

By David Enna, Tipswatch.com

Update, Jan 31, 2025: I noted in this article that I was going to make a “test” I Bond purchase in January 2025 to see if it would trigger a purchase limit because of gift box deliveries in 2024. The transaction was scheduled for Jan. 29 and the money was withdrawn by the Treasury on that date. A day later, TreasuryDirect showed the I Bond in the account, dated Jan 1 2025. So it all worked without a hitch.

Update, Oct 24, 2024: Read through the comments section below for a fascinating discussion on client conversations with TreasuryDirect, which seems to be settling on a clearer “party line” for investors.

For example, this is from reader James S:

Well, I had another call with Treasury Direct this morning. I explained my situation very clearly (my significant other and I each have four sets of Ibonds in gift boxes, each at $10,000, for a total of $40,000). I asked if there would be any repercussions if ALL of those gifts were delivered now and the answer was no, it is perfectly acceptable to deliver all gift Ibonds now. The only restriction is that the recipient would NOT be able to make any further purchases this year.

The reasoning given is that they are “switching to a new system” and want as many gifts delivered as possible before the switch. I assume this means gift Ibonds are going to be phased out.

The same sort of thing can be seen in the Bogleheads thread, with the great majority of people reporting that TreasuryDirect states it will allow gift-box deliveries over the purchase limit: For example:

I also contacted Treasury Direct today. The rep I spoke to was R***y who communicated the following to me:

• There is no limit to how many bonds that can be delivered to a recipient.
• The $10,000 limit references that each bond is limited to $10,000. There is no limit to how many bonds can be delivered to a recipient, even if the recipient has already purchased $10,000 in their own name.
• R***y was aware that I had 3×10,000 bonds sitting in my gift box waiting for delivery to my DW. I was instructed to deliver all the bonds to DW
• I asked if I would be subject to any repercussions or penalties for delivering all the bonds at once right now. I was told “no”.
• I asked if any changes to rules or communications could be expected in the near future to provide better clarity. I was told, “possibly” and something along the lines of “sure as technology changes permitted”

What this means: All indications are that your gift-box purchases can be delivered now. That action makes sense because if you wait until 2025, the delivery will count against the recipient’s ability to purchase additional I Bonds in 2025. So you will have more flexibility if you deliver the I Bonds in 2024.

Am I certain about this path? No, sorry, but that is what TD is indicating.

What I did: I volunteered to be a lab experiment and just went in and delivered our two gift sets of I Bonds, purchased in April and September 2024. The process was quite easy, and I was also able to change the I Bonds to our standard “with” ownership after the deliveries.

When you do this: You will obviously need to know the account number and password for each account, and you will need to reenter the recipient’s account number as the last step before submitting.

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TreasuryDirect this week began sending out emails to investors holding U.S. Series I Savings Bonds in gift boxes, suggesting that these bonds should be delivered “as soon as possible.” Here is what investors are seeing:

At first, this odd email set off “phish” alarms for recipients because it is highly unusual for TreasuryDirect to suggest urgency for delivery of gift savings bonds. That confusion caused TreasuryDirect to post an equally unspecific explanation that this is an authentic email. That page says:

The US Treasury is asking customers with undelivered bonds to deliver them to their recipient, who have ownership of the bond(s).

Something clearly is up. Some investors fear an end to the gift-box program is looming. (Could be right). Some fear I Bonds will be eliminated entirely. (Not likely). Many are just plain confused. (Understandable). See the Bogleheads discussion.

The TreasuryDirect rules governing gift-box purchases have always been clear that the purchase does not apply to the purchaser’s limit of $10,000 per person per year. It has been less clear, but always assumed, is that the amount will apply to the recipient’s purchase limit in the year it is delivered.

Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient.

However, does that mean delivery of the I Bonds counts against the $10,000 cap, meaning the recipient could not purchase additional I Bonds? But the recipient could still receive gifts above the cap?

I just got off the phone with TreasuryDirect representative Vanessa. Here is the conversation:

Is this email suggesting that investors should quickly deliver any I Bonds in gift boxes? Does the email mean to suggest there is urgency to do this?

We would like the gift savings bonds to be delivered.

Does this mean that deliveries in 2024 will be allowed to people who have already purchased I Bonds up to the purchase cap?

If you wanted to, you could wait until January 2025 to make the delivery.

But it would be acceptable to make the delivery in 2024 to someone already at the purchase cap?

Correct. We would like the gift box purchases to be delivered.

I have heard that changes are coming to the gift box program? Could it be eliminated in the future?

I am not sure about that.

This information is similar to what Jennifer Lammer, a reliable financial blogger on YouTube, got from TreasuryDirect yesterday:

What do we do now?

I haven’t yet received the gift-box email, but that isn’t unusual. Lammer’s source said the emails are being sent out in waves. I consider the email a monumental failure in communication by TreasuryDirect. It is vague and unspecific, while also seeming to recommend urgency.

So … I think I want to ponder this situation for a few days. If the “deliver now” information continues to seem to be correct, I would go ahead and deliver my two sets of gift-box (husband and wife) purchases before Oct. 31. Delivering in 2024 instead of January 2025 makes sense because it leaves the door open for additional I Bond purchases in 2025.

Something could be changing at the November 1 reset, and that would explain the implied “urgency” in the TreasuryDirect email. We could see an announcement that the gift-box program is ending, along with further instructions.

I do not think that I Bonds will be discontinued, but I have seen speculation on that.

In my wildest imagination, I could see two things happening on January 1:

1. The gift box program is ended, similar to the end of the paper I Bond program we saw in late August.
2. The Treasury raises the purchase limit for savings bonds to $20,000 per person per year, which would be a long-overdue improvement.

Is that likely to happen? Probably not. So in the meantime, I will watch for additional information and plan to deliver my gift-box purchases later this month. And then hope I don’t get a slap on the wrist.

I will update this post or write an update if I see additional information.

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• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.