Series EE Bond, also known as a “Patriot Bond,” is a non-marketable, interest-bearing U.S. government savings bond. These bonds are backed by the government and are guaranteed to at least double in value over their typical 20-year initial term. Some Series EE bonds continue to accrue interest beyond the original maturity date, extending up to 30 years from issuance. The coupon rates for these bonds are set at the time of issuance and are based on a percentage of long-term Treasury rates.
Key Takeaways: – Series EE Bonds are U.S. government savings bonds that are guaranteed to at least double in value over a 20-year period. – Some bonds continue to pay interest for up to 30 years from issuance. – There is a $25 minimum investment requirement for EE bonds, with a maximum purchase limit of $10,000 per calendar year per investor. How a Series EE Bond Works: The Series EE bond, alongside the Series I bond, is one of two types of savings bonds issued by the U.S. Treasury. Unlike marketable securities, these bonds cannot be bought or sold on the open market. Series EE bonds issued after May 2005 have semi-annual fixed coupon rates set on May 1 and November 1, which apply to all issuances for the next six months. The bonds increase in value monthly, with interest payments distributed semiannually. Series EE bonds are considered ultra-safe, low-risk investments, with interest typically exempt from state and local taxes, although they are subject to federal taxes when they mature or are redeemed. These bonds can be purchased by U.S. citizens, official U.S. residents, minors, and all U.S. government employees, regardless of their citizenship status. Special Considerations: After the Sept. 11, 2001, terrorist attacks, paper EE bonds were re-issued as “Patriot Bonds.” These are identical to paper Series EE Bonds except that any paper bonds purchased through a financial institution after Dec. 10, 2001, have the words “Patriot Bond” printed on the top half of the bond certificate. Financial institutions no longer issue Series EE bonds in paper form, but paper Patriot Bonds can still be cashed or converted into electronic bonds. Requirements for a Series EE Bond: Investors must meet a $25 minimum investment requirement for EE bonds and can purchase up to $10,000 in these bonds each calendar year. Bondholders must hold these investments for at least twelve months before they can redeem the bonds.EE bonds earn interest for up to 30 years. The longer they are held, the more valuable they become. Those who redeem bonds within five years will have three months of accrued interest payments deducted.
Paper bonds were issued at a 50% discount to par. Bonds sourced electronically through TreasuryDirect are purchased at face value. The latter is guaranteed to be worth twice its original value at the first maturity date after 20 years, while paying interest in the same way as paper EE bonds.