Savings Bond Purchase Limit Increased to $10k in 2012

If you’re a fan of savings bonds, then I have some good news for you… The Treasury has increased the TreasuryDirect purchase limit from $5k per bond type (I or EE) per year to $10k. This change offsets the loss of over-the-counter sales of paper savings bonds, effective January 1, 2012.

From the press release that I just received:

The annual purchase limit for online United States Savings Bonds is $10,000 per series, effective January 4, 2012, the Department of the Treasury announced today. The new limit applies to Series EE and Series I savings bonds purchased through TreasuryDirect at www.treasurydirect.gov. Under the new rules, an individual can buy a maximum of $10,000 worth of electronic savings bonds of each series in a single calendar year, or a total of $20,000.

Since 2008, investors could buy a maximum of $5,000 in each series and in each form (paper or electronic). So a single owner could buy $20,000 in one year. As of January 1, 2012, paper bonds are no longer being sold through financial institutions. With today’s announcement, the total amount an individual can purchase in online savings bonds in one calendar year is $20,000. An investor still can purchase up to $5,000 annually in Series I paper savings bonds using his/her tax refund and IRS Form 8888.

So, in effect, they’ve increased the Series I Savings Bond limit from $10k ($5k electronic + $5k paper) to $15k ($10k electronic + %$5k paper) so long as you’re willing to jump through the hoop of buying paper bonds with your tax return.

From my perspective, this is very welcome news. While the fixed rate is still a disappointing 0%, these bonds provide a degree of inflation protection, and also have tax advantages, especially if you redeem them to cover educational expenses.