15 Jun Can I purchase I bonds for my minor grandchild?

Q. Can I purchase I bonds for my six-year-old grandson?
— Gramps

A. I bonds are certainly attractive right now.

With higher inflation, they’re paying nearly 10% interest, something that’s nearly impossible to find with a guarantee and the full backing of the U.S. government.

Yes, adults are permitted to purchase savings bonds for children under the age of 18 and register the bond in the name of the child.

If you would like to purchase an electronic bond for your grandson, the minor’s account should be linked to the account of his parents, to the account of the person who is financially responsible for him if not his parent, said Marnie Hards, a certified financial planner with Aznar Financial Advisors in Morris Plains.

The custodian of this account would then be able to transact on behalf of the minor, Hards said.

Once the minor reaches age 18, he can establish his own Treasury Direct account, and the minor account can be delinked from the adult’s account, she said.

If you want to purchase the I bond as a gift, however, you can do this as well.

“He will not need a Treasury Direct account for this purpose,” she said. “You can buy the bond as a gift into a `Gift Box’ under your grandson’s Social Security number.”

He will not know that you purchased the gift until you deliver it, Hards said.

“To actually receive the gift, he will need a Treasury Direct account,” she said. “I bonds that are stored in a gift box cannot be cashed out. Keep in mind that there is no maximum time that the bond can remain in the gift box.”

Hards said you can purchase a maximum of $10,000 for any recipient, but you can buy for as many recipients as you would like. Please note that if someone has already received $10,000 in gifts from someone else in the form of I bonds, an additional purchase would put them over their annual purchase limit, she said.

“Since the bond will be in your grandson’s name, it belongs to him, and he will be the only one who can cash out the bonds,” she said. “You can also include a second owner or beneficiary on the I bonds that you purchase as a gift. If the original recipient were to pass away, the second owner or beneficiary would inherit the gift.”

Hards said it’s important that you let someone else know that you purchased a gift if it is undelivered. This would allow the recipient to claim it through Treasury Direct should something happen to you, she said.

You can learn more, plus see a video explanation of how to buy a gift, at TreasuryDirect.gov.

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This story was originally published on July 15, 2022.

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