The United States Government limits the total value of the Series I savings bonds you can purchase each year. If you are married, the limits are high enough that you can take advantage of these potentially great investments unless you are a member of the capitalist class. Unfortunately, though, the Treasury department makes things a little bit complicated by setting the Series I savings bond purchase limits based on the way you buy your bonds!
Series I Savings Bond Annual Purchase Limits
Each calendar year, you can invest up to $10,000 in Series I savings bonds but no more than $5,000 each of the following two categories:
$5,000 face value Series I savings bonds in paper certificate form
$5,000 face value Series I savings bonds in electronic form registered through TreasuryDirect
Getting Around the I Bond Annual Purchase Limits
One problem with the savings bonds program is it is difficult for high income families to invest a large percentage of their earnings in savings bonds due to the annual purchase limits. If you are married and have children, however, you and your spouse are both eligible to purchase the bonds, giving you the ability to invest up to $20,000 per year in the Series I savings bonds. These limits also fall well below the current gift tax limits, so both you and your spouse could purchase $10,000 each worth of Series I savings bonds for all of your children, effectively transferring $20,000 to them without any tax consequences every year. This allows high income families to effectively invest much larger amounts in Series I savings bonds without hitting the annual purchase limits.
You can also combine the Series I savings bonds with Series EE savings bonds. Although they have different characteristics and interest rates, the annual purchase limits are different for the Series EE bonds. By combining the two and using family members, you can effectively purchase hundreds of thousands of dollars in savings bonds each and every year if you and your spouse have the resources.
Using Entity Accounts to Increase Series I Savings Bonds Purchase Limits
Another technique to increase the purchase limits on Series I savings bonds is to open TreasuryDirect accounts in the name of your family business, partnership, limited liability company, or other qualified entity. As you learned in Series I Savings Bonds Eligibility Requirements, these types of accounts have been permitted since April 2009. That means that you could buy Series I savings for you, your spouse, and your children, and then turn around and buy more I bonds through a family controlled limited liability company or partnership. Of course, the rules are always in flux and you should check with a qualified tax expert in whom you have trust and confidence.
More About the Series I Savings Bond
You can read our Guide to Investing in Series I Savings Bonds. This will walk you through tons of information about savings bonds, especially the series I savings bond, including how you can add them to your portfolio, annual purchase limits, ownership requirements, tax benefits, and much more.
