TreasuryDirect now allows entity registrations
Tuesday, June 23rd, 2009
Categorized as: Treasury Direct
Entities such as trusts, estates, and businesses can now open accounts to hold Savings Bonds or other Treasury securities in TreasuryDirect. Prior to this change, only individuals with Social Security Numbers were allowed to have TreasuryDirect accounts.
The new options allow registrations in the name of a corporation, LLC (limited liability company), PLLC (professional limited liability company), partnership, sole proprietorship, estate of a decedent, estate of living person (such as an incompetent or minor), or trust.
Registrations are not available for unincorporated associations, governmental organizations, or tribal organizations.
Each account is allowed to have one entity account manager who has the password and can manage the account holdings.
A new entity account can be opened online at TreasuryDirect. You will need the entity’s name, employer tax ID, IRS name control, bank information (name of bank, routing numbers, name on the account), entity account manager information (name, social security number, birth date, email address), and will be allowed to select a password, password reminder, and set three security questions.
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Tom Adams
Tom,
Do the same $5,000 savings bond purchase restrictions apply to entities as they do to individuals? I imagine some people will get creative to extend their $5,000 purchase limit (well, not now, with record low savings bond rates …).
Mario – Entity accounts have the same limits as individual accounts. As you know, for Savings Bonds those limits are $5,000 per year per series per account. For marketable Treasury securities, the limit is $5 million per auction (there are higher per-auction limits for the securities dealers who actually participate in the auction, unlike TreasuryDirect account holders who just get the best price from each auction they invest in.)
In the right interest rate environment we’ll probably see people setting up one or more entity accounts to increase their annual purchase limit, but with the limit at $5,000 it would take a lot of accounts just to get back to where the limits used to be. Rates would have to improve a lot before this dance would be worth it.
Tom Adams
I have a TRUST ACCOUNT set up for paper certificate Series I and EE Bonds. I also have additional Series I and EE Bonds in electronic form. They are set up with POD for Beneficiaries.
Now that entity accounts are permitted, am I required to legally change them into the TRUST ACCOUNT, or can I leave them as they are with the POD designation – something I would prefer to do?
Jerry
Jerry – I’m not sure what laws you’re referring to. The new entity accounts give you more options than you had before, but I’m not sure why you’d think you’d be legally required to use them.
I recommend that you talk to the lawyer who set up the Trust to learn the pros and cons of having your Savings Bonds registered to the Trust versus you and your beneficiary. There’s also information on the pros and cons of Savings Bonds versus Trusts in my book.
Tom Adams
Would the trust account be allowed to have the entity account purchase up to the $5,000 per series limit, and purchase $5,000 in paper form? Like individuals, can I actually have $10,000 purchase in each year in the trust’s name?
“Savings Bonds: You may purchase up to $5,000 of each savings bond type – EE or I bonds – per person (person is either an individual or an entity) each calendar year. Purchases of any other Treasury securities – including paper EE and I Savings Bonds or marketable securities – do not alter the purchase limits for electronic EE and I Savings Bonds. The minimum purchase amount is $25.00, increasing with penny increments not to exceed $5,000.†http://www.treasurydirect.gov/indiv/help/TDHelp/help_ug_137-PurchaseLimitLearnMore.htm
Mary – Yes. In a sense, the new entity accounts increase the annual purchase limits for trusts, since you can now do invest in both paper and electronic bonds, each of which has its own annual limits.
Tom Adams
Tom, I purchased two $5,000 paper I bonds in March 2006. It is imperative that I cash them in before the end of this year. I can’t figure out which month to cash them in so as to get the least penalty possible. Can you help a dyslexic figure this out??
Thanks
Carol – I bonds issued in March 2006 are currently earning 5.94% and won’t begin earning 0% until September.
You want to let three months pass – September, October, November – so that your early redemption penalty becomes zero.
Thus you should wait until December to cash these if you can.
Tom Adams
Tom, I just want to confirm that entities such as an LLC or a Trust may purchase a total of $10,000 in I Bonds – $5000 in paper bonds and $5000 online through Treasury Direct.
Have the paper bond applications been updated to reflect this change?
Hi Jeff – I confirmed that the paper/electronic limits are separate for entity registrations, as they are for individual registrations, with a Treasury spokesperson.
I don’t know if the paper application has been updated, but nothing about the paper application or process has changed, so I doubt it.
Tom Adams
when i was in grade school i purchased savings stamps now i am a senior and would like to know if there is any way to find out what happened to the stamps and if there is a way to track them down
thanks
Theresa – If you lost your Savings Stamps there’s no way to have them replaced or tracked down. Here’s more info on Savings Stamps.
Tom Adams
Tom, my bonds are over 30 years old and I don’t know whether to put them into a trust that I set up or just have the names transferred to my children (with me as co owner). Please help. and where do I down load the forms for this? Thanks, Joan
Joan – since the bonds have stopped paying interest you aren’t allowed to change the name at all, not to a trust and not to your children. You need to cash the bonds, pay the taxes on the interest you’ve earned with some of the money, and reinvest the rest with the registration you desire. Any other course of action – particularly continuing to hold bonds that aren’t earning any interest – is a financial mistake.
Tom Adams