purchasing unlimited ibonds in a single year: gift box hack with a partner

[tawyer]

When I first learned about i-bonds I understood a $10K per year limit per SSN (forget about the $5K tax refund for this purpose). Then I learned about minor linked accounts, which are an opportunity for investing an extra $10K per year under a dependent minor's SSN. Again, leaving that out of the discussion.

Then I learned about the "gift box", which separates "purchase" from "delivery": you can purchase for another person's SSN in one year, and deliver in the same year or some other year. The key is that the delivery is limited to $10K per year per SSN (assuming the receiver hasn't purchased any for themselves). This article indicates no limit on how much I could purchase for, say, a reciprocating spouse in one year, only on the delivery:
https://thefinancebuff.com/buy-i-bonds-as-gift.html#htoc-purchase-limit

I've read the other i-bond threads in the forummm, and I note that some partners are buying $20K each in a single year ($10K for themselves, $10K for their partner). Has anyone bought more in a single year?

Here's a hypothetical plan: buy $30K in 2022. $10K for me, 2x$10K for reciprocating partner in gift box, deliver $10K to partner in 2023, $10K to partner in 2024. Partner does the same.

Naturally the money would be locked up for longer. It would be a way to have more cash earning >9% today.

[waltworks]

You can indeed do this, you just can't deliver (or extract) more than $10k a year of the gift money. Great strategy if you think iBonds will keep paying good interest and you don't need the money anytime soon. I have done some of this myself (partner and I gifted each other $10k after we both bought $10k for ourselves) this year.

-W

[TomTX]

Question: Do the 12 month and 5 year clocks reset upon transfer?

[oldladystache]

nope

[iluvzbeach]

We did this to take advantage of the high rates, for funds we don’t need to access. We’ll deliver the gifts in future years. The clock starts when you purchase and it’s the purchase amount only that counts toward the limit, regardless of how much interest has accrued prior to delivery of the gift.

Also, if you have a trust, you can buy $10K for each trust.

[nalor511]

100k: 2 individuals (20k), 2 sole props (20k), 4 trusts (40k), 2 gifts (20k). Could cash out any time after Apr 2023.

[MrGreen]

We've done 40k so far (2x10k for myself and spouse). Flirting with another 20k but not sure about locking up through 2024. If inflation remains high for November's rate reset we'll probably buy 20k more in October.

[cool7hand]

Thanks for sharing!

[Scandium]

When I first learned about i-bonds I understood a $10K per year limit per SSN (forget about the $5K tax refund for this purpose). Then I learned about minor linked accounts, which are an opportunity for investing an extra $10K per year under a dependent minor's SSN. Again, leaving that out of the discussion.

Then I learned about the "gift box", which separates "purchase" from "delivery": you can purchase for another person's SSN in one year, and deliver in the same year or some other year. The key is that the delivery is limited to $10K per year per SSN (assuming the receiver hasn't purchased any for themselves). This article indicates no limit on how much I could purchase for, say, a reciprocating spouse in one year, only on the delivery:
https://thefinancebuff.com/buy-i-bonds-as-gift.html#htoc-purchase-limit

I've read the other i-bond threads in the forummm, and I note that some partners are buying $20K each in a single year ($10K for themselves, $10K for their partner). Has anyone bought more in a single year?

Here's a hypothetical plan: buy $30K in 2022. $10K for me, 2x$10K for reciprocating partner in gift box, deliver $10K to partner in 2023, $10K to partner in 2024. Partner does the same.

Naturally the money would be locked up for longer. It would be a way to have more cash earning >9% today.

So do gift bonds accrue interest while they sit, before being delivered? Otherwise there's no point to them right, you could just have waited.. (that article was pretty crap and didn't explain important details).

[MrGreen]

@Scandium yes the bonds start accruing interest as soon as they're bought. So they sit in the gift box earning interest. This allows the purchaser to take advantage of the current exceptionally good rates.

[tawyer]

When I first learned about i-bonds I understood a $10K per year limit per SSN (forget about the $5K tax refund for this purpose). Then I learned about minor linked accounts, which are an opportunity for investing an extra $10K per year under a dependent minor's SSN. Again, leaving that out of the discussion.

Then I learned about the "gift box", which separates "purchase" from "delivery": you can purchase for another person's SSN in one year, and deliver in the same year or some other year. The key is that the delivery is limited to $10K per year per SSN (assuming the receiver hasn't purchased any for themselves). This article indicates no limit on how much I could purchase for, say, a reciprocating spouse in one year, only on the delivery:
https://thefinancebuff.com/buy-i-bonds-as-gift.html#htoc-purchase-limit

I've read the other i-bond threads in the forummm, and I note that some partners are buying $20K each in a single year ($10K for themselves, $10K for their partner). Has anyone bought more in a single year?

Here's a hypothetical plan: buy $30K in 2022. $10K for me, 2x$10K for reciprocating partner in gift box, deliver $10K to partner in 2023, $10K to partner in 2024. Partner does the same.

Naturally the money would be locked up for longer. It would be a way to have more cash earning >9% today.

So do gift bonds accrue interest while they sit, before being delivered? Otherwise there's no point to them right, you could just have waited.. (that article was pretty crap and didn't explain important details).

Quoting from the "pretty crap" article ;-)

Interest and Holding Period
Interest and the holding period start in the month of your purchase. If you pre-purchase gifts and wait to deliver them to the recipient at a later time, bonds in the gift box still earn the same interest rates as other bonds. The holding period for cashing out also starts right away. If five months have passed between the time of purchase and the time of delivery, the recipient only has to wait another seven months before they can cash out as opposed to the full 12 months for freshly purchased bonds.

I'll concede that there was a better summary somewhere else when I first learned about this, but I couldn't find it when I made this post ;-p

I'd also missed the important detail about the holding period: that the one year lockup starts on the date of purchase, not the date of delivery. So one year from purchase date the gift can be cashed out, effectively letting you get at your calendar year delivery allocation sooner than if you'd bought them yourself. This makes it clearer why people often stop at $20K per SSN (one $10K for yourself, one $10K for a partner): because it's the most that can only be locked up for a year.

[tawyer]

Thanks for the responses, everyone. Bummed that I'm a couple of weeks too late for the 8% interest party. And not more on top of sole proprietorships for the extra EINs...

[MrGreen]

@tawyer If inflation remains high in November you can join the part in October! :)

[nalor511]

Thanks for the responses, everyone. Bummed that I'm a couple of weeks too late for the 8% interest party. And not more on top of sole proprietorships for the extra EINs...

To clarify each additional Sole Prop and Trust will get you an extra $10k, that's correct. But you can register each of them with your same SSN, you do not need separate EINs, regardless of how many Sole Props and Trusts you use to purchase ibonds