Gifting US Treasury Bonds To Circumvent $10,000 Limit (I Bonds)


Reader C tips us off to a loophole which allows locking in more than $10,000 at the current high 7.12% I Bonds interest rate. It only works for those whose finances are in 2-player mode.

READ FIRST: US Treasury Bonds Rate Set To 7.12% (I Bonds)

You can gift someone else I Bonds with no purchase limit (link). While the recipient can only buy/receive $10,000 in a calendar year, using the gifting option locks in the current interest rate for whenever the recipient will eventually get the funds.

For example: Jane and Dave are a married couple with shared finances. Each of them has already bought $10,000 in I Bonds for 2022. Jane can buy an additional $10,000 (or any amount) during March 2022, with the gift being fully executed to Dave in January 2023. Since Jane bought the I Bonds during March 2022, the bonds will begin accruing interest at the March 2022 rate and the maturity period will be calculated based on the March 2022 date.

Dave can also do the same and buy $10,000 in bond gifts in March 2022 which will be given to Jane in January 2023.

You probably don’t want to buy huge volumes of gifts since it’ll then take years before the recipient will be able to receive the gift and break the bond. In all likelihood the bond rates will go way down in the coming years, and you’ll have to keep the funds locked into I Bonds at the low rate until you slowly execute the gifts $10,000 per year. But buying an extra $10,000 to lock in the current rate and to execute the gift in 2023 sounds like an interesting idea.

Here’s a how-to from Treasury Direct (pdf) on how to go about gifting I Bonds.

Before going the gifting route, there are more basic ways of increasing your threshold above $10,000:

  • Buy $10,000 for each person, e.g. two spouses can buy $10,000 for each and you can buy $10,000 for each child
  • Get $5,000 back in paper bonds as a tax overpayment refund
  • Buy $10,000 for each business entity EIN you own
  • Create a revocable living trust which allows buying an addition $10,000

Personally I did $20,000 between 2021 and 2022. I finally got around to opening a Treasury account in my business name and found it easier than anticipated. Maybe I’ll get another $5,000 in paper bonds from tax overpayment which would bring me up to $35,000 in I Bonds. I’m not planning on opening additional businesses, trusts, or going the gifting route, but I found the option intriguing and thought it worth sharing.

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