Anyone help me understand US Savings Bonds EE

[lawren2 Malibu Beach Barbie & A Super Moderator Find all posts View Profile Close lawren2]

I am obviously a very confused camper.

Here's the deal. As many of us have done I purchased bonds thru payroll deduction at work for about 25 years. Stick them in the safe deposit box and completely forget about them. A friend told me they are worthless after maturity, so I went and dug out anything prior to 1994.

When I use the government calculator it shows that all have surpassed face value and show an interest rate of 4%.

This is what is stated on the website for the age of bonds I'm questioning:
Individual - EE/E Bonds Issued before May 1995

Bonds Issued November 1982 through February 1993
Began earning interest on a fixed graduated scale that started at 4.16% at six months and increased during the first five years to reach a guaranteed minimum rate at five years
Bonds with issue dates of November 1986 through February 1993 had a guaranteed minimum rate of 6% per year, compounded semiannually, for their 12-year original maturity period
Bonds with issue dates of November 1982 through October 1986 had a guaranteed minimum rate of 7.5% per year, compounded semiannually, for their 10-year original maturity period
Once held for five years, they became eligible for market-based rates

So are these bonds 1988 thru 1993 earning the 4% the website calculator says today? How do I determine when it is better to sell them, take the tax hit and find another tax deferred/tax free vehicle? and what in the Lord's name do they base the Market-based rates on and when are the changes made? and what is the once held for 5 years thing? It says they earned 6% for 12 years?

[rod Member Find all posts View Profile Close rod]

Series E savings bonds issued before December, 1965, earned interest for 40 years; Series E savings bonds issued in or after December, 1965, earn interest for 30 years. So if you have any Series E bonds that were issued before March of 1978, those bonds are no longer earning interest, and you should cash them in.

Series E bonds were replaced by the Series EE bond in 1980. So far all Series EE bonds earn interest for 30 years, so all Series EE bonds are still earning interest.

[StressCadet Senior Member Find all posts View Profile Close StressCadet]

Rod is correct.
I have savings bonds from 1990 on...I did cash in some a few years ago from the late 80's. I use the Savings Bond Wizard I downloaded from the website and mine are still earning 4.00 % with a 5.37 % yield. It's a real pain to go back and enter the old ones-but I keep up with it pretty well now and I can see everything I need to know. Pretty cool actually. Maturity date according to the "Wizard" for bonds entered in 1990 is 2020. I'm holding....until college breaks the bank

[wackymother Senior Member Find all posts View Profile Close wackymother]

A friend told me they are worthless after maturity, so I went and dug out anything prior to 1994.

But they're not, are they? Your friend was wrong? The interest rates change after maturity, but the bonds don't become worthless.

[jlwquilter Senior Member Find all posts View Profile Close jlwquilter]

Yes, the friend was wrong. The bonds are certainly NOT worthless. If you throw them away, you are throwing money away. They may have stopped earning interest (if the bonds are X years old) but they still have the value they earned up to that point.

Maybe the "friend" was hoping to take the "worthless" bonds off Lawren's hands!

[riverdees05 Platinum Contributor Find all posts View Profile Close riverdees05]

My mother has some of these that my Dad purchased when he was working. She cashes them in on the 30 year mark. A couple of times she has missed the 30 mark and cashed them in a month or two late. They were still worth what they were are at 30 years, just haven't gained any additional interest. A $25.00 bond can be worth over $225.00, so don't throw away.

[lawren2 Malibu Beach Barbie & A Super Moderator Find all posts View Profile Close lawren2]

Yes, the friend was wrong. The bonds are certainly NOT worthless. If you throw them away, you are throwing money away. They may have stopped earning interest (if the bonds are X years old) but they still have the value they earned up to that point.

Maybe the "friend" was hoping to take the "worthless" bonds off Lawren's hands!

My mother has some of these that my Dad purchased when he was working. She cashes them in on the 30 year mark. A couple of times she has missed the 30 mark and cashed them in a month or two late. They were still worth what they were are at 30 years, just haven't gained any additional interest. A $25.00 bond can be worth over $225.00, so don't throw away.

OK not worthless obviously but not earning any interest after a certain point. I just needed to understand when that certain point was.

Thanks everybody. I'll let them tool along at whatever 90% of 5 year Tbill rate is. I'll just toss them back in the safe deposit box and not worry about them for a while to come, until the college bills start coming.

Education Tax Exclusion
The savings bond education tax exclusion permits qualified taxpayers to exclude from their gross income all or part of the interest paid upon the redemption of eligible Series EE and I Bonds issued after 1989, when the bond owner pays qualified higher education expenses at an eligible institution.

Additional Requirements to Qualify

Qualified higher education expenses must be incurred during the same tax year in which the bonds are redeemed.
You must be at least 24 years old on the first day of the month in which you bought the bond(s).
When using bonds for your child's education, the bonds must be registered in your name and/or your spouse's name. Your child can be listed as a beneficiary on the bond, but not as a co-owner.
When using bonds for your own education, the bonds must be registered in your name.
If you're married, you must file a joint return to qualify for the exclusion.
You must meet certain income requirements.
Your post-secondary institution must qualify for the program by being a college, university, or vocational school that meets the standards for federal assistance (such as guaranteed student loan programs).

Qualified Expenses
Qualified educational expenses include:

Tuition and fees (such as lab fees and other required course expenses).
Expenses that benefit you, your spouse, or a dependent for whom you claim an exemption.
Expenses paid for any course required as part of a degree or certificate-granting program.
Expenses paid for sports, games, or hobbies qualify only if part of a degree or certificate program.