<Can someone explain why it could make sense to buy now (for a combined rate of 8.x) vs on May 1st? Is it because the rate in Nov is already known to be 9% and rate could fall in Dec?>
Nov rate is not known now. It will be set in Nov. If Nov rate is lower than the 7.x% set last Nov (current rate), it would be better to buy now.
thanks all!
I meant to ask if Oct rate is already known, that’s why if I buy now I am guaranteed for 8.x% for a year. I think the answer is yes.
I guess the only problem with the gifting is your money is locked (not sure for one year or until delivery?), and if the rate tank back to 2% in Nov, then the govt will be very happy … to lock in all these money
Bigshan,
I think you are correct. The last paragraph in the link you provided is this:
“How much in I bonds can I buy as gifts?
The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.”
This indicates that the limit is for the purchase and does not mention distribution.
So those thinking they can buy 30 or 40K for another this year and then distribute 10K per year , this indicates that it will not work for you.
Buyer Beware, get a confirmation from Treasury or a tax lawyer.
Best of luck.
Yes. The May 1 rate is good for all I-bonds purchased from May 22 to Oct 22. The rate in Nov 22 is unknown.
If you buy in April the 7.12% rate is good thru Sept 22, and the 9.62% rate picks up from Oct 22 thru Apr 23. The Nov 22 rate would then pickup from Apr 23 thru Sept 23 and so on. You can redeem a bond with penalty after 1 year, not before.
If the rates stay high, you just keep the bond another 6 months.
Whatever rate you buy the bond at is the rate for the first 6 months. I-bonds.
I-bonds have a base rate plus an inflation rate. The current base rate is zero. If the base rate increases significantly then other discussions come in.
<So those thinking they can buy 30 or 40K for another this year and then distribute 10K per year , this indicates that it will not work for you.
Buyer Beware, get a confirmation from Treasury or a tax lawyer.
You’re right. It’s not worth the risk of getting a penalty bill or interest being forfeited. The language is quite clear.
If you read through the comments section in the link I provided in my first post, you’ll see a lively debate on the various statements on the TD web site AND responses people have gotten from TD reps. There’s certainly some ambiguity and apparently-conflicting statements. As I’ve been reading extensively on the topic, I have yet to hear of one instance of a gift transaction to the same person being canceled. But it will be interesting to see what happens given the huge volume that no doubt continues apace.