[Federal Register Volume 67, Number 201 (Thursday, October 17, 2002)]
[Rules and Regulations]
[Pages 64276-64295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26406]
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Part V
Department of the Treasury
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Fiscal Service
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31 CFR Parts 351 et al.
Regulations Governing Treasury Securities; New Treasury Direct System;
Final Rule
Federal Register / Vol. 67, No. 201 / Thursday, October 17, 2002 /
Rules and Regulations
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Parts 351, 357, 359, 360, and 363
Regulations Governing Treasury Securities; New Treasury Direct
System
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: We are implementing a new book-entry, online system for
purchasing, holding and conducting transactions in Treasury securities.
The system is known as New Treasury Direct.
The only Treasury security that may be held in New Treasury Direct
at its initial implementation is the book-entry Series I savings bond.
We plan to make the system available for other Treasury securities in
the future as we expand the system.
We are adding a new part to provide the governing regulations
specific to the New Treasury Direct system, and the governing
regulations for the book-entry Series I savings bond. The new part
will, in the future, provide governing regulations for other eligible
Treasury securities as we expand the system. Although most of the
functionalities for the New Treasury Direct system will be available at
the initial public implementation, a few functionalities will be
delayed for a period of time. The delayed functionalities are those
affecting the accounts of minors, the granting of viewing and
transaction rights for secondary owners, and the granting of viewing
rights for beneficiaries and others. Therefore, the regulations will
have dual effective dates. The sections of part 363 that will be
available at initial implementation will be effective upon publication
in the Federal Register. The sections, or parts of sections, of part
363 that will not be implemented initially will have a delayed
effective date. We will announce the effective date of the affected
sections by a Final Rule in the Federal Register.
We revised the offering of United States savings bond of Series I
to provide for the book-entry Series I savings bonds. We also rewrote
the regulations in plain language.
We revised the regulations governing United States savings bonds of
Series I to make it clear that the regulations only refer to definitive
Series I savings bonds.
We revised the regulations governing book-entry Treasury bonds,
notes and bills, to make clear the differences between TreasuryDirect,
an existing book-entry system for purchasing and holding marketable
Treasury securities, and the New Treasury Direct.
We revised the offering of United States savings bonds of Series I,
and the offering of United States savings bonds of Series EE, to permit
the mailing of savings bonds to foreign addresses under certain
circumstances.
DATES: Effective October 17, 2002. However, sections 363.24(e), (f),
(g), (h), (m), 363.27, 363.28, 363.29, 363.30, 363.31, 363.32, and
363.69(d), (e), (f), (g), are stayed indefinitely; the Fiscal Service
will announce the effective date(s) when they will take effect.
ADDRESSES: You can download this final rule at the following Internet
address: http://www.publicdebt.treas.gov.
FOR FURTHER INFORMATION CONTACT:
Elisha Whipkey, Director, Division of Program Administration, Office of
Securities Operations, Bureau of the Public Debt, at (304) 480-6319 or
[email protected].
Susan Klimas, Attorney-Adviser, Office of the Chief Counsel, Bureau of
the Public Debt, at (304) 480-8692 or [email protected].
Dean Adams, Assistant Chief Counsel, Office of the Chief Counsel,
Bureau of the Public Debt, at (304) 480-8692 or
[email protected].
Edward Gronseth, Deputy Chief Counsel, Bureau of the Public Debt, at
(304) 480-8692 or [email protected].
SUPPLEMENTARY INFORMATION:
Background
Public Debt has developed a new account-based, online, book-entry
system for purchasing, holding, and conducting transactions in Treasury
securities via the Internet. The new system is known as New Treasury
Direct. We are adding a new part to the Code of Federal Regulations to
provide the governing regulations for the new system and for securities
held within the new system.
Upon initial implementation of the system, only book-entry Series I
savings bonds will be offered through New Treasury Direct. We plan to
offer other Treasury securities in future enhancements to the system.
The new system is not replacing the current TreasuryDirect system
for holding book-entry marketable Treasury securities; at least for
some period of time the two systems will coexist even after marketable
securities are offered through New Treasury Direct.
We will continue to offer definitive Series I savings bonds at
least for some period of time.
The New Treasury Direct system will benefit the investor by
enabling the investor to purchase eligible Treasury securities, conduct
transactions, and self-manage his or her New Treasury Direct account
using the Internet. The system will provide greater flexibility and
convenience for the investor by eliminating the paperwork burden
inherent in the current TreasuryDirect system.
The New Treasury Direct system and the book-entry Series I savings
bonds will benefit the government by providing a cost-effective and
efficient processing environment, thereby reducing processing costs to
Treasury.
New Treasury Direct
This final rule provides the governing regulations for the New
Treasury Direct system. The system is substantively different from the
current TreasuryDirect system.
New Treasury Direct permits only one individual (the purchaser) to
hold an account in his or her own right. The New Treasury Direct
account will hold securities over which the account owner has control,
in various forms of registration. New Treasury Direct is accessed
through the Internet.
At the initial implementation, New Treasury Direct will be
available to the general public for individual purchasers with a valid
social security number, an account at a United States depository
financial institution that accepts debits and credits using the
Automated Clearing House (ACH) method of payment, and a United States
address. We plan to expand the system in future enhancements to include
trusts and business entities.
The system will initially offer only book-entry Series I savings
bonds. We plan to offer marketable Treasury securities and exchanges of
selected definitive savings bonds in future enhancements to the system.
We will authenticate the identity of an applicant for a New
Treasury Direct account using an online authentication service. Once
the applicant's identity has been authenticated, he or she will create
a password to access the account. The account owner may then purchase
securities and conduct transactions online through his or her account
using the password. At our option, we may require a written application
containing the applicant's certified signature. All payments for
purchases and redemptions will be made by debits and credits using the
ACH method.
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The online transactions that an account owner may conduct include:
Purchasing eligible Treasury securities; redeeming savings bonds held
in the account; changing or removing a beneficiary or secondary owner;
transferring securities; granting or revoking secondary owner rights;
delivering securities purchased as gifts to the recipient's New
Treasury Direct account; making changes to account information;
changing ACH information; viewing histories of transactions and pending
transactions; changing or deleting pending transactions; changing a
password; changing account security information; and viewing or
redeeming securities by a secondary owner when he or she has been
granted those rights.
When the New Treasury Direct system is expanded to marketable
securities, other transactions may be available online as well.
A parent may open an account for a minor through the account of the
parent. The parent will create the password for the minor's account and
will certify online that he or she is acting on behalf of the minor.
The parent may redeem securities through the minor's account but may
not purchase securities through the account. The parent may not
transfer securities from the minor's account. A person who purchases a
security as a gift for the minor may deliver the gift security to the
minor's account. The parent may then redeem the security on the minor's
behalf using the minor's account. We have set the age of majority for
purposes of the regulations at 18 years. When the minor reaches the age
of 18 years, the parent is required to give the minor control of the
minor's account. If the parent or legal guardian fails to give the
minor control of the minor's account, we will provide offline
procedures for the minor to gain control of the account.
Book-Entry Series I Savings Bonds
We will be offering a book-entry Series I savings bond. The
offering circular for Series I savings bonds is being amended to
provide for the offering of the book-entry I bond, and has also been
rewritten in plain language.
Both definitive and book-entry Series I savings bonds earn interest
according to a formula indexed to inflation. However, the terms and
conditions of the two securities, including registration options,
differ in many respects.
The forms of registration for book-entry Series I savings bonds are
single owner, primary owner with secondary owner, and owner with
beneficiary. In addition, several special forms of registration are
offered for securities belonging to the estates of deceased owners and
legally incompetent persons.
The primary owner with secondary owner form of registration
replaces the coowner form used for other savings bonds. In the coowner
form of registration, both coowners have an equal right to the bond. In
the primary owner with secondary owner form, the purchaser of the bond,
the primary owner, has control of the bond. The primary owner may give
the secondary owner the right to view or the right to make transactions
in the bond, and may at any time revoke any rights given. The primary
owner may remove the secondary owner without the consent of the
secondary owner.
The single owner and owner with beneficiary forms of registration
are similar to the registrations offered currently in definitive Series
I savings bonds.
Special forms of registration are offered for bonds belonging to
the estates of deceased owners and legally incompetent individuals. At
this time, special forms of registration will not be offered for
initial purchases. Bonds may be registered in the name of the legal
guardian or legal representative, and may be held in the personal New
Treasury Direct account of the legal guardian or legal representative.
The legal guardian or legal representative is not permitted to make new
purchases on behalf of the estate of the decedent or incompetent
person.
The book-entry Series I savings bonds may be transferred from one
New Treasury Direct account to another in order to give a gift (or in
response to a final judgment, court order, divorce decree, or a
property settlement agreement). The owner of the bond must certify
online that the transfer is for the purpose of a gift or for one of the
specified exceptions.
A Series I savings bonds may also be purchased as an irrevocable
gift. The purchaser may deliver a gift bond to the account of the
intended recipient immediately upon issue, or the purchaser may hold
the bond until the purchaser chooses to deliver the bond to the
intended recipient.
When the gift bond is transferred or delivered to the recipient, it
will be transferred or delivered in the single owner form of
registration to the owner named on the gift bond.
The limitation on purchases for a book-entry Series I savings bond
is $30,000 per account per year for bonds purchased by the account
owner in his or her own right. Bonds purchased as gifts are included in
the amount limitation of the recipient when delivered. The book-entry
Series I savings bond may be purchased in a minimum amount of $25, with
one-cent increments above that amount per transaction. The book-entry
bond may be redeemed or transferred as a gift (or transferred pursuant
to other permitted transfers) in an amount of $25 or greater redemption
value.
The provisions relating to judicial proceedings are consistent with
those governing definitive Series I savings bonds. However, the primary
owner with secondary owner form of registration for book-entry Series I
savings bonds mandates that some issues are treated differently. In the
primary owner with secondary owner form of registration, the secondary
owner has no right to redeem unless the primary owner gives him or her
that right, and the right is revocable at any time. Thus, for purposes
of judicial proceedings, a secondary owner is treated the same as a
beneficiary.
The regulations that provide for the offering of Series EE and I
savings bonds are being amended to remove the prohibition against
mailing bonds to foreign addresses.
We are amending the regulations governing book-entry Treasury
bonds, notes and bills. This part covers the existing TreasuryDirect
system, which has been in place since 1986. The amendment will
differentiate the two systems and reference the New Treasury Direct
regulations.
Procedural Requirements
This final rule does not meet the criteria for a ``significant
regulatory action'' as defined in Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.
This final rule relates to matters of public contract and
procedures for United States securities. The notice and public
procedures requirements and delayed effective date requirements of the
Administrative Procedure Act are inapplicable, pursuant to 5 U.S.C.
553(a)(2).
As no notice of proposed rulemaking is required, the Regulatory
Flexibility Act (5 U.S.C. 601, et seq.) does not apply.
We ask for no new collections of information in this final rule.
Therefore, the Paperwork Reduction Act (44 U.S.C. 3507) does not apply.
List of Subjects
31 CFR Part 351
Bonds, Federal Reserve system, Government securities.
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31 CFR Part 357
Bonds, Electronic funds transfer, Federal Reserve system,
Government securities, Securities.
31 CFR Part 359
Bonds, Federal Reserve system, Government securities, Securities.
31 CFR Part 360
Bonds, Federal Reserve system, Government securities, Securities.
31 CFR Part 363
Bonds, Electronic funds transfer, Federal Reserve system,
Government securities, Securities.
Accordingly, for the reasons set out in the preamble, 31 CFR
Chapter II, Subchapter B, is amended as follows:
PART 351--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE
1. The authority citation for part 351 continues to read as
follows:
Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.
2. Revise Sec. 351.6 to read as follows:
Sec. 351.6 Delivery of bonds.
Issuing agents are authorized to arrange for the delivery of Series
EE bonds. Deliveries are made by mail to the address given by the
purchaser. If the purchaser's address is within the United States, its
territories or possessions, or the Commonwealth of Puerto Rico, bonds
will be delivered at the risk of the United States. Bonds delivered
elsewhere will be delivered at the risk of the purchaser; however, at
the discretion of the United States, delivery to an address within the
United States may be required, or delivery may be refused to addresses
in countries referred to in part 211 of this chapter.
PART 357--REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS, NOTES
AND BILLS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT SERIES
NO. 2-86)
3. The authority citation for part 357 continues to read as
follows:
Authority: 31 U.S.C. chapter 31; 5 U.S.C. 301; 12 U.S.C. 391.
4. Revise Sec. 357.0 to read as follows:
Sec. 357.0 Book-entry systems.
(a) Treasury bills, notes and bonds. Treasury bills, notes and
bonds shall be maintained in either of the following two book-entry
systems:
(1) Treasury/Reserve Automated Debt Entry System (TRADES). A
Treasury security is maintained in TRADES if it is credited by a
Federal Reserve Bank to a Participant's Securities Account. See subpart
B of this part for rules pertaining to TRADES.
(2) TREASURY DIRECT Book-entry Securities System (TREASURY DIRECT).
A Treasury security is maintained in TREASURY DIRECT if it is credited
to a TREASURY DIRECT account as described in Sec. 357.20. Such
accounts may be accessed by investors in accordance with subpart C of
this part through a designated Federal Reserve Bank or the Bureau of
the Public Debt. See subpart C of this part for rules pertaining to
TREASURY DIRECT.
(b) Transferability between TRADES and TreasuryDirect. A Treasury
security eligible to be maintained in Treasury Direct under the terms
of its offering circular or pursuant to notice published by the
Secretary may be transferred to or from an account in TRADES from or to
an account in TREASURY DIRECT in accordance with Sec. 357.22(a).
(c) New Treasury Direct System (New Treasury Direct). New Treasury
Direct is an online (Internet-based), book-entry system maintained by
Treasury. The TreasuryDirect system is a separate book-entry system for
marketable Treasury securities only. The regulations governing New
Treasury Direct are found at part 363, and are substantially different
from the terms and conditions of securities held in TreasuryDirect.
5. Revise part 359 to read as follows:
PART 359--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I
Subpart A--General Information
Sec.
359.0 What does this part cover?
359.1 What regulations govern Series I savings bonds?
359.2 [Reserved]
359.3 What special terms do I need to know to understand this part?
359.4 In what form are Series I savings bonds issued?
359.5 What is the maturity period of a Series I savings bonds?
359.6 When may I redeem my Series I bond?
359.7 If I redeem a Series I savings bonds before five years after
the issue date, is there an interest penalty?
359.8 How does interest accrue on Series I savings bonds?
359.9 When are interest rates for Series I savings bonds announced?
359.10 What is the fixed rate of return?
359.11 What is the semiannual inflation rate?
359.12 What happens in deflationary conditions?
359.13 What are composite rates?
359.14 How are composite rates determined?
359.15 When is the composite rate applied to Series I savings bonds?
359.16 When does interest accrue on Series I savings bonds?
359.17 When is interest payable on Series I savings bonds?
359.18 Is the determination of the Secretary on rates and values
final?
359.19 How is interest calculated?
359.20-359.24 [Reserved]
Subpart B--Definitive Series I Savings Bonds
359.25 What are the denominations and prices of definitive Series I
savings bonds?
359.26 When are definitive Series I savings bonds validly issued?
359.27 What is the issue date of a definitive Series I savings
bonds?
359.28 Are taxpayer identification numbers (TINs) required for the
registration of definitive Series I savings bonds?
359.29 What amount of definitive Series I savings bonds may I
purchase per year?
359.30 Are definitive Series I savings bonds purchased in the name
of an individual computed separately from bonds purchased in a
fiduciary capacity?
359.31 What definitive Series I savings bonds are included in the
computation?
359.32 What definitive Series I savings bonds are excluded from the
computation?
359.33 What happens if I purchase definitive Series I savings bonds
in excess of the maximum amount?
359.34 May I purchase definitive Series I savings bonds over-the-
counter?
359.35 May I purchase definitive Series I savings bonds through a
payroll savings plan?
359.36 May I purchase definitive Series I savings bonds through
employee thrift, savings, vacation, and similar plans?
359.37 How are definitive Series I savings bonds delivered?
359.38 How is payment made when definitive Series I savings bonds
are redeemed?
359.39 How are redemption values calculated for definitive Series I
savings bonds?
359.40 How can I find out what my definitive Series I savings bonds
are worth?
359.41-359.44 [Reserved]
Subpart C--Book-Entry Series I Savings Bonds
359.45 How are book-entry Series I savings bonds purchased and held?
359.46 What are the denominations and prices of book-entry Series I
savings bonds?
359.47 How is payment made for purchases of book-entry Series I
savings bonds?
359.48 How are redemption payments made for my redeemed book-entry
Series I savings bonds?
359.49 What is the issue date of a book-entry Series I savings
bonds?
359.50 What amount of book-entry Series I savings bonds may I
purchase per year?
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359.51 What book-entry Series I savings bonds are included in the
computation of purchases?
359.52 What happens if any person purchases book-entry Series I
savings bonds in excess of the maximum amount?
359.53 Are taxpayer identification numbers (TINs) required for the
registration of book-entry Series I savings bonds?
359.54 When is a book-entry Series I savings bonds validly issued?
359.55 How are redemption values calculated for book-entry Series I
savings bonds?
359.56 How can I find out what my book-entry Series I savings bonds
are worth?
359.57-359.64 [Reserved]
Subpart D--Miscellaneous Provisions
359.65 How are Series I savings bonds taxed?
359.66 Is the Education Savings Bonds Program available for Series I
savings bonds?
359.67 Does Public Debt prohibit the issuance of Series I savings
bonds in a chain letter scheme?
359.68 May Public Debt issue Series I savings bonds only in book-
entry form?
359.69 Does Public Debt make any reservations as to issue of Series
I savings bonds?
359.70 May Public Debt waive any provision in this part?
359.71 What is the role of Federal Reserve Banks and Branches?
359.72 May the United States supplement or amend the offering of
Series I savings bonds?
Appendix A to part 359--Redemption Value Calculations
Appendix B to part 359--Composite Semiannual Rate Period Table
Appendix C to part 359--Investment Considerations
Appendix D to part 359--Tax Considerations
Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.
Subpart A--General Information
Sec. 359.0 What does this part cover?
This part is the offering of United States Savings Bonds of Series
I (referred to as Series I bonds or bonds) for sale to the people of
the United States by the Secretary of the Treasury (Secretary). This
offer was effective September 1, 1998, and will continue until
terminated by the Secretary.
Sec. 359.1 What regulations govern Series I savings bonds?
(a) The regulations in part 360 apply to definitive (paper) Series
I savings bonds.
(b) The regulations in part 363 apply to book-entry Series I
savings bonds.
(c) We expressly disclaim any representations or warranties
regarding Series I savings bonds that in any way conflict with these
regulations and other applicable law.
Sec. 359.2 [Reserved]
Sec. 359.3 What special terms do I need to know to understand this
part?
Accrual date is the first day of any month on which earnings on a
Series I bond accrue. The redemption value of a bond does not change
between these accrual dates.
Automated Clearing House (ACH) means a funds transfer system
governed by the Rules of the National Automated Clearing House
Association (NACHA). NACHA provides for the interbank clearing of
electronic entries for participating financial institutions.
Bank account means your account at a United States depository
financial institution (whether a bank or other financial institution)
to which you have directed that ACH debits and payments be made.
Beneficiary refers to the second individual named in the
registration of a security held in definitive form registered ``John
Doe SSN 123-45-6789 POD (payable on death to) Joseph Doe.'' In the New
Treasury Direct system, beneficiary refers to the second individual
named in the registration of a security registered ``John Doe SSN 123-
45-6789 POD (payable on death to) Joseph Doe SSN 987-65-4321.'' In
these examples, Joseph Doe is the beneficiary.
Book-entry bond means a Series I savings bonds maintained by
Treasury solely as a computer record.
Composite annual rate means an annual interest rate that combines
an annual fixed rate of return and a semiannual inflation rate.
Coowner means either the first or the second individual named in
the registration of a definitive Series I savings bonds registered
``John Doe SSN 123-45-6789 or Joseph Doe.'' In this example, John Doe
and Joseph Doe are coowners.
CPI-U, or U.S. City Average All Items Consumer Price Index for All
Urban Consumers (non seasonally adjusted) is a monthly index of the
prices paid by consumers for consumer goods and services, maintained by
the Bureau of Labor Statistics of the U.S. Department of Labor.
Definitive bond means a Series I savings bonds issued in paper
form.
Deflation means a decrease in the CPI-U from one month to another.
Face amount refers to the amount inscribed on the front of a
definitive Series I savings bonds.
Fiduciary means the court-appointed or otherwise qualified person,
regardless of title, who is legally authorized to act for another.
Fixed rate or fixed rate of return is a component of the composite
annual rate for a Series I savings bonds that is established by the
Secretary of the Treasury for the life of the bond.
Individual means a natural person. Individual does not mean an
organization, representative, or fiduciary.
Inflation means an increase in the CPI-U from one month to another.
Interest, as used in this part, is the difference between the
principal amount and the redemption value of the bond.
Issue date is the first day of the month in which an authorized
issuing agent receives payment of the issue price of the bond.
Issuing agent means an organization that has been qualified under
part 317.
New Treasury Direct system (New Treasury Direct) is an online
account system in which you may hold and conduct transactions in
eligible book-entry Treasury securities.
Owner is either a single owner, the first individual named in the
registration of a bond held in the owner with beneficiary form of
registration, or the primary owner of a book-entry bond held in the
primary owner with secondary owner form of registration.
Par means the principal amount of a Series I savings bond; for
definitive bonds, par is the same as the face amount.
Paying agent means a financial institution that has been qualified
under part 321.
Person means an entity including an individual, trust, estate,
corporation, government entity, association, partnership, and any other
similar organization. Person does not mean a Federal Reserve Bank.
Primary owner means the first individual named in the registration
of a book-entry bond held in New Treasury Direct registered ``John Doe
SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this example,
John Doe is the primary owner.
Principal amount means the amount of the original investment.
Principal amount does not include any interest earned.
Redemption of a book-entry Series I savings bonds refers to payment
of principal and accrued interest on the bond at final maturity, or, at
the option of the owner, prior to final maturity. The owner of a book-
entry savings bonds held in New Treasury Direct may redeem all
principal and interest or a portion of the principal and the
proportionate amount of interest.
Redemption of a definitive Series I savings bonds refers to the
payment of principal and accrued interest when the owner presents the
bond for payment.
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Redemption value means principal plus accrued interest of a Series
I savings bonds, as of the date of redemption. In the case of book-
entry Series I savings bonds, it also refers to a portion of the
principal amount plus a proportionate amount of accrued interest of a
bond, as of the date of redemption.
Registration of a book-entry Series I savings bonds means that the
name and Taxpayer Identification Number (TIN) of all registrants are
maintained on our records for a book-entry bond.
Registration of a definitive Series I savings bonds means that the
name and TIN of the owner or first-named co-owner are inscribed on the
face of the bond.
Secondary owner means the second individual named in the
registration of a book-entry bond held in New Treasury Direct
registered ``John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-
4321.'' In this example, Joseph Doe is the secondary owner.
Semiannual inflation rate means a component of the composite annual
rate that is based on the six-month percentage change in the CPI-U.
Semiannual rate periods are the six-month periods beginning on the
date of issue and on each semiannual anniversary of the date of issue
to maturity.
Series I savings bond means a savings bonds, whether definitive or
book-entry, that is purchased at par and pays interest based on a
formula that incorporates both an annual fixed rate and a semiannual
inflation rate.
Single owner means the person named in the registration of a
savings bonds without a coowner, beneficiary or secondary owner.
Taxpayer identification number (TIN) means the identifying number
required on tax returns and other documents submitted to the Internal
Revenue Service; that is, an individual's social security account
number (SSN) or an employer identification number (EIN). A SSN is
composed of nine digits separated by two hyphens, for example, 123-45-
6789. An EIN is composed of nine digits separated by one hyphen, for
example, 12-3456789. The hyphens are an essential part of the numbers.
We, us, or our refers to the agency, the Bureau of the Public Debt.
The term extends to the Secretary of the Treasury and the Secretary's
delegates at the Treasury Department and Bureau of the Public Debt. The
term also extends to any fiscal or financial agent we designate to act
on behalf of the United States.
You or your refers to an owner of a Series I savings bonds.
Sec. 359.4 In what form are Series I savings bonds issued?
Series I savings bonds are issued in either book-entry or
definitive form.
Sec. 359.5 What is the maturity period of a Series I savings bonds?
Series I savings bonds have a total maturity period of 30 years
from the issue date, consisting of an original maturity period of 20
years and an extension period of 10 years.
Sec. 359.6 When may I redeem my Series I bond?
You may redeem your Series I savings bond at any time beginning six
months after its issue date.
Sec. 359.7 If I redeem a Series I savings bonds before five years
after the issue date, is there an interest penalty?
If you redeem a bond less than five years after the issue date, we
will reduce the overall earning period by three months. For example, if
you redeem a bond issued January 1, 2002, nine months later on October
1, 2002, the redemption value will be determined by applying the value
calculation procedures and composite rate for that bond as if the
redemption date were three months earlier (July 1, 2002). However, we
will not reduce the redemption value of a bond subject to the three-
month interest penalty below the issue price (par). This penalty does
not apply to bonds redeemed five years or more after the issue date.
Sec. 359.8 How does interest accrue on Series I savings bonds?
A bond accrues interest based on both a fixed rate of return and a
semiannual inflation rate. A single, annual rate called the composite
rate reflects the combined effects of the fixed rate and the semiannual
inflation rate. For more information, see Appendix B of part 359.
Sec. 359.9 When are interest rates for Series I savings bonds
announced?
(a) The Secretary will furnish fixed rates, semiannual inflation
rates, and composite rates for Series I savings bonds in announcements
published each May 1 and November 1.
(b) If the regularly scheduled date for the announcement is a day
when the Treasury is not open for business, then the Secretary will
make the announcement on the next business day. However, the effective
date of the rates remains the first day of the month of the
announcement.
(c) The Secretary may announce rates at any other time.
Sec. 359.10 What is the fixed rate of return?
The Secretary, or the Secretary's designee determines the fixed
rate of return. The fixed rate is established for the life of the
bond.\1\ The most recently announced fixed rate is only for bonds
purchased during the six months following the announcement, or for any
other period of time announced by the Secretary.
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\1\ However, the fixed rate is not a guaranteed minimum rate;
the composite rate could possibly be less than the fixed rate in
deflationary situations.
---------------------------------------------------------------------------
Sec. 359.11 What is the semiannual inflation rate?
The index used to determine the semiannual inflation rate is the
non-seasonally adjusted CPI-U (the Consumer Price Index for All Urban
Consumers for the U.S. City Average for All Items, 1982-84=100)
published by the Bureau of Labor Statistics of the U.S. Department of
Labor. (For further information on CPI-U considerations, see Appendix C
to part 359 at section 1.) The semiannual inflation rate reflects the
percentage change, if any, in the CPI-U over a six-month period. We
announce this rate twice a year, in May and November. The semiannual
inflation rate we announced in May 2002 reflects the percentage change
between the CPI-U figures from the preceding March 2002 and September
2001. The rate of change over the six-month period, if any, will be
expressed as a percentage, rounded to the nearest one-hundredth of one
percent. More specifically, the semiannual inflation rate will be
determined by the following formula (the resulting rate will be rounded
to the nearest one-hundredth of one percent):
Semiannual inflation rate = (CPI-UCurrent - CPI-
UPrior) / CPI-UPrior
Sec. 359.12 What happens in deflationary conditions?
In certain deflationary situations, the semiannual inflation rate
may be negative. Negative semiannual inflation rates will be used in
the same way as positive semiannual inflation rates. However, if the
semiannual inflation rate is negative to the extent that it completely
offsets the fixed rate of return, the redemption value of a Series I
bond for any particular month will not be less than the value for the
preceding month.
Sec. 359.13 What are composite rates?
Composite rates are single, annual interest rates that reflect the
combined effects of the fixed rate and the semiannual inflation rate.
[[Page 64281]]
Sec. 359.14 How are composite rates determined?
Composite rates are set according to the following formula (See
Appendix A to part 359 for examples of calculations involving composite
interest rates.):
Composite rate = {(Fixed rate / 2) + Semiannual inflation rate +
[Semiannual inflation rate x (Fixed rate / 2)]{time} x 2.\2\
---------------------------------------------------------------------------
\2\ Example for I bonds issued May 2002-October 2002:
Fixed rate = 2.00%
Inflation rate = 0.28%
Composite rate = [0.0200 / 2 + 0.0028 + (0.0028 x 0.0200 / 2)]
x2
Composite rate = [0.0100 + 0.0028 + 0.000028] x2
Composite rate = 0.012828 x 2
Composite rate = 0.025656
Composite rate = 0.0257 (rounded)
Composite rate = 2.57% (rounded)
---------------------------------------------------------------------------
Sec. 359.15 When is the composite rate applied to Series I savings
bonds?
The most recently announced composite rate applies to a bond during
its next semiannual rate period. A bond's semiannual rate periods are
consecutive six-month periods, the first of which begins with the
bond's issue date. This means that there can be a delay of several
months from the time of a composite rate announcement to the time that
rate determines interest earnings for a bond. For example, if you
purchased a bond in April, its semiannual rate periods begin every
April and October. At the beginning of the semiannual rate period in
April, the most recently announced composite rate would have been the
rate we announced the previous November. This rate will determine
interest earnings for your bond for the next six months, through the
end of September. At the beginning of the semiannual rate period in
October, the most recently announced composite rate would be the rate
announced the previous May. This rate will determine interest earnings
for your bond through the end of the following March. However, if you
purchased a bond instead in May, its semiannual rate periods begin in
May and November. Therefore, the composite rates announced in May and
November will apply immediately to this bond. (See Appendix C to part
359 at Sec. 2 for a discussion of rate lag.)
Sec. 359.16 When does interest accrue on Series I savings bonds?
(a) Interest, if any, accrues on the first day of each month; that
is, we add the interest earned on a bond during any given month to its
value at the beginning of the following month.
(b) The accrued interest compounds semiannually.
Sec. 359.17 When is interest payable on Series I savings bonds?
Interest earnings are payable upon redemption.
Sec. 359.18 Is the determination of the Secretary on rates and values
final?
The Secretary's determination of fixed rates of return, semiannual
inflation rates, composite rates, and savings bonds redemption values
is final and conclusive.
Sec. 359.19 How is interest calculated?
We base all calculations of interest on a $25 unit. We use the
value of this unit to determine the value of bonds in higher
denominations. The effect of rounding off the value of the $25 unit
increases at higher denominations. This can work to your slight
advantage or disadvantage, depending on whether we round the value up
or down.\3\
---------------------------------------------------------------------------
\3\ For example: A composite rate of 2.57% will result in a
newly purchased $25 unit increasing in value after six months to
$25.32, when rounded to the nearest cent. Thus, a $5,000 bond
purchased at the same time as the $25 unit will be worth $5,064
after six months ([$5,000 divided by $25] x $25.32 = $5,064.) In
contrast, if it applied directly to a $5,000 bond, the rate would
render a value of $5,064.25 after six months, a difference of 25
cents. (This example does not include any discussion of the three-
month interest penalty that applies if you redeem a bond less than
five years after its issue date.)
---------------------------------------------------------------------------
Sec. 359.20-359.24 [Reserved]
Subpart B--Definitive Series I Savings Bonds
Sec. 359.25 What are the denominations and prices of definitive
Series I savings bonds?
Definitive bonds are issued in denominations of $50, $75, $100,
$200, $500, $1,000, $5,000, and $10,000. These bonds are sold at par;
that is, the purchase price is the same as the denomination (face
value).
Sec. 359.26 When are definitive Series I savings bonds validly
issued?
A definitive bond is validly issued when it is registered as
provided in part 360, and when it bears an issue date and the
validation indicia of an authorized issuing agent.
Sec. 359.27 What is the issue date of a definitive Series I savings
bonds?
The issue date of a definitive bond is the first day of the month
in which an authorized issuing agent receives payment of the issue
price.
Sec. 359.28 Are taxpayer identification numbers (TINs) required for
the registration of definitive Series I savings bonds?
The inscription of a definitive bond must include the TIN of the
owner or first-named co-owner. If the bond is being purchased as a gift
or award and the owner's TIN is not known, the TIN of the purchaser
must be included in the inscription on the bond.
Sec. 359.29 What amount of definitive Series I savings bonds may I
purchase per year?
The principal amount of definitive bonds that may be purchased in
the name and TIN of any person, in any calendar year, is limited to
$30,000.
Sec. 359.30 Are definitive Series I savings bonds purchased in the
name of an individual computed separately from bonds purchased in a
fiduciary capacity?
We compute the purchases of bonds in the name of any person in an
individual capacity separately from purchases in a fiduciary capacity
(for instance, as representative for the estate of an individual).
Sec. 359.31 What definitive Series I savings bonds are included in
the computation?
In computing the purchases for each person, we include the
following outstanding definitive bonds purchased in that calendar year:
(a) All bonds registered in the name of and bearing the taxpayer
identification number (TIN) of that person alone or as co-owner;
(b) All bonds registered in the name of the representative of the
estate of that person and bearing that person's TIN; and
(c) All gift bonds registered in the name of that person but
bearing the TIN of the purchaser.
Sec. 359.32 What definitive Series I savings bonds are excluded from
the computation?
In computing the purchases for each person, the following are
excluded:
(a) Bonds on which that person is named as beneficiary;
(b) Bonds to which that person has become entitled upon the death
of the registered owner;
(c) Bonds to which that person has become entitled by virtue of the
termination of a trust or the occurrence of a similar event; and
(d) Bonds that are purchased and redeemed within the same calendar
year.
Sec. 359.33 What happens if I purchase definitive Series I savings
bonds in excess of the maximum amount?
If you have bonds issued during any one calendar year in excess of
the prescribed maximum amount, we reserve the right to take any action
we deem necessary to adjust the excess. You should obtain instructions
for adjustment of the excess from the Bureau of the Public Debt,
Parkersburg, WV 26106-1328, or e-mail at
<[email protected].
[[Page 64282]]
Sec. 359.34 May I purchase definitive Series I savings bonds over-
the-counter?
You may purchase definitive bonds over-the-counter through any
participating issuing agent.\4\ To purchase over-the-counter, you must
submit a purchase application, along with payment in the amount of the
issue price to an issuing agent. You may use any means of payment
acceptable to the issuing agent. You may authorize purchases on a
recurring basis in your application. The issuing agent bears the burden
of collection and the risk of loss for non-collection or return of the
payment.
---------------------------------------------------------------------------
\4\ However, an organization serving as an issuing agent because
of its status as an employer or an organization operating an
employer's payroll savings plan under Sec. 317.2(c) may sell bonds
only through payroll savings plans.
---------------------------------------------------------------------------
Sec. 359.35 May I purchase definitive Series I savings bonds through
a payroll savings plan?
You may purchase definitive bonds through deductions from your pay
if your employer maintains a payroll savings plan. An authorized
issuing agent must issue the bonds.
Sec. 359.36 May I purchase definitive Series I savings bonds through
employee thrift, savings, vacation, and similar plans?
You may purchase bonds registered in the names of employee plans in
authorized denominations through a designated Federal Reserve Bank, as
provided in part 360 of this chapter.
Sec. 359.37 How are definitive Series I savings bonds delivered?
We deliver definitive bonds by mail to your address. If your
address is within the United States, its territories or possessions, or
the Commonwealth of Puerto Rico, we will deliver bonds at our risk.
Bonds delivered elsewhere will be delivered at your risk; however, at
our discretion, we may require delivery to an address within the United
States, or refuse delivery to addresses in countries referred to in
part 211 of this chapter.
Sec. 359.38 How is payment made when definitive Series I savings
bonds are redeemed?
A financial institution qualified as a paying agent under the
provisions of part 321 will pay the current redemption value of a
definitive Series I bond presented for payment. The bond must meet the
requirements for payment specified in part 360. You must establish your
identity and entitlement to redemption to the satisfaction of the
agent, in accordance with our instructions and identification
guidelines, and must sign and complete the request for payment.
Sec. 359.39 How are redemption values calculated for definitive
Series I savings bonds?
We determine the redemption value of a definitive savings bonds for
the accrual date (the first day of each month) by first determining the
composite rate as defined in Sec. 359.13. If the result of the
composite rate calculation is a negative value, zero will be the
assumed composite rate in the redemption value calculation. Redemption
values are calculated using the following formula (For examples of the
calculation, see Appendix A to part 359):
FV = PV x {[1 + (CR / 2)] (m / 6){time}
Where:
FV (future value) = redemption value on the accrual date rounded to the
nearest cent without consideration of penalty.
PV (present value) = redemption value at the beginning of the
semiannual rate period calculated without consideration of penalty. For
bonds that are older than five years, PV will equal the redemption
value at the start of the semiannual rate period.
CR = composite rate converted to decimal form by dividing by 100.
m = number of full calendar months elapsed during the semiannual rate
period.
Sec. 359.40 How can I find out what my definitive Series I savings
bonds are worth?
(a) Redemption values. Redemption values are available for
definitive bonds in various formats and media.
(1) You may determine the redemption value for definitive bonds on
the Internet at <www.savingsbonds.gov.
(2) You may download savings bonds calculators from the Internet at
<www.savingsbonds.gov.
(3) You may obtain paper tables from the Bureau of the Public Debt,
Parkersburg, West Virginia 26106-1328. We reserve the right to cease
making paper tables of redemption values available.
(b) Redemption penalty. Redemption values published in the tables
reflect the three-month interest penalty applied to bonds redeemed
prior to five years from the date of issue.
Sec. 359.41-359.44 [Reserved]
Subpart C--Book-Entry Series I Savings Bonds
Sec. 359.45 How are book-entry Series I savings bonds purchased and
held?
Book-entry bonds must be purchased and held online through your New
Treasury Direct account. We provide instructions for opening an account
online at http://www.publicdebt.treas.gov.
Sec. 359.46 What are the denominations and prices of book-entry
Series I savings bonds?
Book-entry bonds are issued in a minimum amount of $25, with
additional increments of one cent. Book-entry bonds are sold at par
value.
Sec. 359.47 How is payment made for purchases of book-entry Series I
savings bonds?
Purchases of book-entry I bonds are made through your New Treasury
Direct account. We will debit your designated account at a United
States depository financial institution for payment of the bonds.
Sec. 359.48 How are redemption payments made for my redeemed book-
entry Series I savings bonds?
We will make payments electronically by direct deposit, using the
ACH method, to your designated account at a United States depository
financial institution.
Sec. 359.49 What is the issue date of a book-entry Series I savings
bonds?
The issue date of a book-entry savings bonds is the first day of
the month in which we receive ACH settlement for the bond.
Sec. 359.50 What amount of book-entry Series I savings bonds may I
purchase per year?
The principal amount of book-entry bonds that you may purchase in
any calendar year is limited to $30,000 per New Treasury Direct
account.
Sec. 359.51 What book-entry Series I savings bonds are included in
the computation of purchases?
(a) In computing the purchases for each New Treasury Direct account
owner in any calendar year, we include all bonds purchased by the
account owner in that calendar year.
(b) Bonds purchased as gifts or in a fiduciary capacity are not
included in the computation for the purchaser.
(c) Bonds transferred or delivered from one New Treasury Direct
account to another New Treasury Direct account are included in the
computation for the recipient.
[[Page 64283]]
Sec. 359.52 What happens if any person purchases book-entry Series I
savings bonds in excess of the maximum amount?
We reserve the right to take any action we deem necessary to adjust
the excess, including the right to remove the excess bonds from your
New Treasury Direct account and refund the payment price to your bank
account of record using the ACH method of payment.
Sec. 359.53 Are taxpayer identification numbers (TINs) required for
registration of book-entry Series I savings bonds?
The TIN of each person named in the registration is required to
purchase a book-entry bond.
Sec. 359.54 When is a book-entry Series I savings bonds validly
issued?
A book-entry bond is validly issued when it is posted to your New
Treasury Direct account.
Sec. 359.55 How are redemption values calculated for book-entry
Series I savings bonds?
We base current redemption values (CRV) for book-entry Series I
savings bonds on the definitive savings bonds CRV. To calculate the
book-entry values, we use the CRV for the $100 denomination Series I
savings bonds and calculate a CRV prorated to the book-entry par
investment amount for the corresponding issue and redemption dates.
Calculated book-entry CRV will be rounded to the nearest one cent.\5\
The formula is as follows (Examples of the calculation are given in
Appendix A to part 359.):
---------------------------------------------------------------------------
\5\ Example: Calculated value of $25.044 rounds to $25.04;
calculated value of $25.045 rounds to $25.05.
[Book-entry par investment / 100] x [CRV value for $100 bond].
Sec. 359.56 How can I find out what my book-entry Series I savings
bonds are worth?
(a) Redemption values. You may access redemption values for your
book-entry bonds through your New Treasury Direct account.
(b) Redemption penalty. Redemption values shown in your New
Treasury Direct account reflect the three-month interest penalty
applied to bonds redeemed prior to five years from the date of issue.
Sec. 359.57-359.64 [Reserved]
Subpart D--Miscellaneous Provisions
Sec. 359.65 How are Series I savings bonds taxed?
Interest is subject to all taxes imposed under the Internal Revenue
Code of 1986, as amended. The bonds are also subject to Federal and
State estate, inheritance, gift, or other excise taxes. The bonds are
exempt from all other taxation by any State or local taxing authority.
(See Appendix D to part 359 for further information.)
Sec. 359.66 Is the Education Savings Bonds Program available for
Series I savings bonds?
You may be able to exclude from income for Federal income tax
purposes all or part of the interest received on the redemption of
qualified bonds during the year. To qualify for the program, you or the
co-owner (in the case of definitive savings bonds) must have paid
qualified higher education expenses during the same year. You also must
have satisfied certain other conditions. This exclusion is known as the
Education Savings Bonds Program. Information about the program can be
found in Internal Revenue Service Publications. (For example, see
Publication 17, ``Your Federal Income Tax,'' Publication 550,
``Investment Income and Expenses,'' and Publication 970, ``Tax Benefits
of Higher Education.'')
Sec. 359.67 Does Public Debt prohibit the issuance of Series I
savings bonds in a chain letter scheme?
We do not permit bonds to be issued in a chain letter or pyramid
scheme. We authorize an issuing agent to refuse to issue a bond or
accept a purchase order if there is reason to believe that a purchase
is connected with a chain letter. The agent's decision is final.
Sec. 359.68 May Public Debt issue Series I savings bonds only in
book-entry form?
We reserve the right to issue bonds only in book-entry form.
Sec. 359.69 Does Public Debt make any reservations as to issue of
Series I savings bonds?
We may reject any application for Series I bonds, in whole or in
part. We may refuse to issue, or permit to be issued, any bonds in any
case or class of cases, if we deem the action to be in the public
interest. Our action in any such respect is final.
Sec. 359.70 May Public Debt waive any provision in this part?
We may waive or modify any provision of this part in any particular
case or class of cases for the convenience of the United States or in
order to relieve any person or persons of unnecessary hardship:
(a) If such action would not be inconsistent with law or equity;
(b) If it does not impair any material existing rights; and
(c) If we are satisfied that such action would not subject the
United States to any substantial expense or liability.
Sec. 359.71 What is the role of Federal Reserve Banks and Branches?
(a) Federal Reserve Banks and Branches are fiscal agents of the
United States. They are authorized to perform such services as we may
request of them, in connection with the issue, servicing and redemption
of Series I bonds.
(b) We have currently designated the following Federal Reserve
Offices to provide savings bonds services:
------------------------------------------------------------------------
Reserve district Geographic area
Servicing site served served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo New York, Boston.. Connecticut,
Branch, 160 Delaware Avenue, Maine,
Buffalo, NY 14202. Massachusetts,
New Hampshire,
New Jersey
(Northern half),
New York, Rhode
Island, Vermont,
Puerto Rico,
Virgin Islands.
Federal Reserve Bank, Pittsburgh Cleveland, Delaware, Kentucky
Branch, 717 Grant Street, Philadelphia. (eastern half),
Pittsburgh, PA 15219. New Jersey,
(southern half),
Ohio,
Pennsylvania,
West Virginia
(northern
panhandle).
Federal Reserve Bank of Richmond, Atlanta. Alabama, District
Richmond, 701 East Byrd Street, of Columbia,
Richmond, VA 23219. Florida, Georgia,
Louisiana
(southern half),
Maryland,
Mississippi
(southern half),
North Carolina,
South Carolina,
Tennessee
(eastern half),
Virginia, West
Virginia (except
northern
panhandle).
[[Page 64284]]
Federal Reserve Bank of Minneapolis, Illinois (northern
Minneapolis, 90 Hennepin Chicago. half), Indiana
Avenue, Minneapolis, MN 55401. (northern half),
Iowa, Michigan,
Minnesota,
Montana, North
Dakota, South
Dakota,
Wisconsin.
Federal Reserve Bank of Kansas Dallas, San Alaska, Arizona,
City, 925 Grand Boulevard, Francisco, Kansas Arkansas,
Kansas City, MO 64106. City, St. Louis. California,
Colorado, Hawaii,
Idaho, Illinois
(southern half),
Indiana (southern
half), Kansas,
Kentucky (western
half), Louisiana
(northern half),
Mississippi
(northern half),
Missouri,
Nebraska, Nevada,
New Mexico,
Oklahoma, Oregon,
Tennessee
(western half),
Texas, Utah,
Washington,
Wyoming, Guam.
------------------------------------------------------------------------
Sec. 359.72 May the United States supplement or amend the offering of
Series I savings bonds?
We may supplement or amend the terms of this offering of Series I
bonds at any time.
Appendix A to Part 359--Redemption Value Calculations
1. What are some examples of calculations of redemption values for
definitive Series I savings bonds?
(a) A bond five years or older. Assume a composite rate of
3.97%, effective May 1, 2003, for a $25 unit, with an issue date of
September 1, 1998, and a redemption value of $31.90 as of September
1, 2003. The February 1, 2004, redemption value is calculated as
follows: bonds issue-dated in September have semiannual rate periods
beginning each March 1 and September 1. The first semiannual rate
period to begin on or after the date of the May 1, 2003, rate
announcement of the composite rate would be the period beginning
September 1, 2003. PV, the present value, $31.90, would be the
redemption value of the bond at the beginning of the semiannual rate
period (September 1, 2003). The composite rate, 3.97% converted to a
decimal, would be 0.0397. The number of months, m, is five, since
five full calendar months (September through January) have lapsed
since the beginning of the semiannual rate period. FV, the
redemption value (rounded to the nearest cent), is then the result
of the formula:
FV = PV x {[1 + (CR / 2)] (m / 6){time}
Where FV = 31.90 x {[1 + (0.0397 / 2)] (5 / 6){time} =
$32.43
The redemption value for an actual denomination of a Series I
bond can be determined by applying the appropriate multiple, for
example:
$32.43 x ($100.00 / $25.00) for a bond with a $100.00 face amount;
or
$32.43 x ($1000.00 / $25.00) for a bond with a $1000.00 face amount.
(b) A bond less than five years old. Assume a composite rate of
3.97% effective May 1, 2003, for a $25.00 unit, with an issue date
of December 1, 2000, a redemption date of February 1, 2004, and a
value on June 1, 2003, of $28.45, without consideration of penalty.
A three-month penalty is assessed since the redemption date is less
than five years after the issue date. The penalty is accounted for
by assuming that the redemption date is three months earlier
(November 1, 2003). The February 1, 2004, redemption value is then
calculated as follows: bonds issue-dated in December have semiannual
rate periods that begin each June 1 and December 1. The first
semiannual rate period to begin on or after the May 1, 2003, rate
announcement of the composite rate would be the period beginning
June 1, 2003. PV, the present value, $28.45, is the value of the
bond at the beginning of the semiannual rate period (June 1, 2003),
without consideration of penalty. The composite rate, 3.97%,
converted to a decimal, would be 0.0397. The number of months, m, is
five, since five full calendar months (June through October) have
elapsed since the beginning of the semiannual rate period and the
redemption date (as adjusted for penalty). FV, the redemption value
(rounded to the nearest cent), is then the result of the formula:
FV = PV x {[1 + (CR / 2)] (m / 6){time} where
FV = $28.45 x {[1 + (0.397 / 2)] (5 / 6){time} = $28.92
2. What is an example of a book-entry Series I savings bonds
redemption value calculation?
Assume a New Treasury Direct par investment amount in a book-
entry Series I savings bonds of $34.59, with an issue date of May,
2001, and a redemption date of December, 2001. The published CRV for
a definitive $100 Series I savings bonds issued May, 2001 and
redeemed December, 2001 = $101.96.
Calculation:
[(Book-entry par investment) / (100)] x CRV value for $100 bond
[(34.59 / 100)] x 101.96
[0.3459] x 101.96
35.267964
= $35.27
Appendix B to Part 359--Composite Semiannual Rate Period Table
1. What months make up the composite semiannual rate period?
You may use the following table to find when a bond's semiannual
rate period begins and when we'll announce the rate that applies
during each period.
----------------------------------------------------------------------------------------------------------------
Then its semiannual
If your Bond has an issue date rate period begins-- We announce the rate that applies during a rate period
of-- in--
----------------------------------------------------------------------------------------------------------------
January.......................... January 1.......... November 1 (of the previous year).
July 1............. May 1.
February......................... February 1......... November 1 (of the previous year).
August 1........... May 1.
March............................ March 1............ November 1 (of the previous year).
September 1........ May 1.
April............................ April 1............ November 1 (of the previous year).
October 1.......... May 1.
May.............................. May 1.............. May 1.
November 1......... November 1.
June............................. June 1............. May 1.
December 1......... November 1.
July............................. July 1............. May 1.
January 1.......... November 1 (of the previous year).
August........................... August 1........... May 1.
February 1......... November 1 (of the previous year).
September........................ September 1........ May 1
March 1............ November 1 (of the previous year).
[[Page 64285]]
October.......................... October 1.......... May 1.
April 1............ November 1 (of the previous year).
November......................... November 1......... November 1.
May 1.............. May 1.
December......................... December 1......... November 1.
June 1............. May 1.
----------------------------------------------------------------------------------------------------------------
Appendix C to Part 359--Investment Considerations
1. What are some index contingencies?
(a) If a previously reported CPI-U is revised, we will continue to
use the previously reported CPI-U in calculating redemption values.
(b) If the CPI-U is rebased to a different year, we will continue
to use the CPI-U based on the base reference period in effect when the
security was first issued, as long as that CPI-U continues to be
published.
(c) If, while an inflation-indexed savings bonds is outstanding,
the applicable CPI-U is discontinued or, in the judgment of the
Secretary, fundamentally altered in a manner materially adverse to the
interests of an investor in the security, or, in the judgment of the
Secretary, altered by legislation or Executive Order in a manner
materially adverse to the interests of an investor in the security,
Treasury, after consulting with the Bureau of Labor Statistics or any
successor agency, will substitute an appropriate alternative index.
Treasury will then notify the public of the substitute index and how it
will be applied. The Secretary's determinations in this regard will be
final.
(d) If the CPI-U for a particular month is not reported by the last
day of the following month, we will announce an index number based on
the last 12-month change in the CPI-U available. Any calculations of
our payment obligations on the inflation-indexed savings bonds that
rely on that month's CPI-U will be based on the index number that we
have announced.
2. How will inflation lag affect my Series I savings bonds?
The inflation rate component of investor earnings will be
determined twice each year. This rate will be the percentage change in
the CPI-U for the six months ending each March and September. The rate
will be included in the composite rate that is announced each May and
November. For Series I bonds offered from September 1, 1998, through
October 31, 1998, the inflation rate component of investor earnings
will be the percentage change in the CPI-U for the six months ending
March 31, 1998. This rate will be included in the composite rate that
is announced for Series I bonds offered effective from September 1,
1998, through October 31, 1998. In the event the Secretary, or the
Secretary's designee, announces a composite rate at an effective date
other than May 1 or November 1, the announcement will specify the
period to be used to calculate the semiannual inflation rate. Each
composite rate will be effective for the entirety of the applicable
rate period that begins while the rate is in effect. Thus, an inflation
rate may affect interest accruals from 3 to 13 months from the date
that the CPI-U is measured.
Example 1. The inflation rate determined from the CPI-U for the
six-month period from October, 2003, through March, 2004, will be
included in the composite rate announced in May, 2004. For a bond
purchased in May 1999, this rate would go into effect immediately,
since a new semiannual rate period for this bond will begin in May,
2004. Series I bonds issued in May begin new semiannual rate periods
in the months of May and November. In this example, the inflation
rate will have its earliest impact in June 2004, when interest from
May accrues, three months after the end of the six-month CPI-U
period that ends in March, 2004.
Example 2. The May 1, 2004, rate will apply similarly to a bond
purchased in October 1999. Series I bonds issued in October begin
new semiannual rate periods in the months of April and October.
Thus, for this bond, the May 1, 2004, composite rate (which includes
the inflation rate) will not go into effect until a new semiannual
rate period begins on October 1, 2004. This rate, therefore, will
determine the inflation-indexed portion of each interest accrual
from November, 2004, through April, 2005. In this example, the
inflation rate will have its latest impact in April 2005, 13 months
following the six-month CPI-U period that ended March 31, 2004.
Appendix D to Part 359--Tax Considerations
1. What are some general tax considerations?
General. Interest is subject to all taxes imposed under the
Internal Revenue Code of 1986, as amended. The bonds are also
subject to Federal and State estate, inheritance, gift, or other
excise taxes. The bonds are exempt from all other taxation by any
State or local taxing authority.
2. What reporting methods are available for savings bonds?
(a) Reporting methods. You may use either of the following two
methods for reporting the increase in the redemption value of the
bond for Federal income tax purposes:
(1) Cash basis method. You may defer reporting the increase to
the year of final maturity, redemption, or other disposition,
whichever is earliest; or
(2) Accrual basis method. You may elect to report the increase
each year, in which case the election applies to all Series I bonds
that you then own, those subsequently acquired, and to any other
obligations purchased on a discount basis, such as savings bonds of
Series E or EE.
(b) Changing methods. If you use the cash basis method, you may
change to the accrual basis method without obtaining permission from
the Internal Revenue Service. However, once you elect to use the
accrual basis method in paragraph (a)(2), you may change the method
of reporting the increase only by following the specific procedures
prescribed by the Internal Revenue Service for making an automatic
method change. For further information, you may contact the Internal
Revenue Service director for your area, or the Internal Revenue
Service, Washington, DC 20224.
3. What transactions have potential tax consequences?
The following types of transactions, among others, may have
potential tax consequences:
(a) A reissue that affects the rights of any of the persons
named on a definitive Series I savings bonds may have tax
consequences for the owner.
(b) The transfer of a book-entry Series I savings bonds from one
owner to another may have tax consequences for the purchaser.
(c) The redemption of a book-entry Series I savings bonds by the
secondary owner may have tax consequences for the primary owner.
(d) The purchase of a Series I savings bonds as a gift may have
gift tax consequences for the purchaser.
PART 360--REGULATIONS GOVERNING DEFINITIVE UNITED STATES SAVINGS
BONDS, SERIES I
6. The authority citation for part 360 continues to read as
follows:
Authority: 5 U.S.C. 301; 31 U.S.C. 3105 and 3125.
7. Revise the heading of part 360 to read as set forth above.
8. Revise Sec. 360.0 to read as follows:
[[Page 64286]]
Sec. 360.0 Applicability
The regulations in this part govern transactions in definitive
United States Savings Bonds of Series I bearing issue dates of
September 1, 1998, or later.
9. Revise paragraph (a) of Sec. 360.2 to read as follows:
Sec. 360.2 Definitions.
(a) Bond, or Series I savings bonds, as used in this part, means a
definitive United States Savings Bonds of Series I.
* * * * *
10. Add part 363 to read as follows:
PART 363--REGULATIONS GOVERNING SECURITIES HELD IN THE NEW TREASURY
DIRECT SYSTEM
Subpart A--General
Sec.
363.0 What is the New Treasury Direct system?
363.1 What Treasury securities are covered by these regulations?
363.2 What agency administers New Treasury Direct?
363.3 What Treasury securities may be held in New Treasury Direct?
363.4 How is New Treasury Direct different from the Treasury Direct
system?
363.5 How do I contact Public Debt?
363.6 What special terms do I need to know to understand this part?
363.7-363.14 [Reserved]
Subpart B--New Treasury Direct System
363.15 What is a New Treasury Direct account?
363.16 Who is eligible to open a New Treasury Direct account?
363.17 How can I open a New Treasury Direct account?
363.18 How will you authenticate my identity?
363.19 What is the procedure for offline authentication?
363.20 How do I access my account?
363.21 Who is liable if someone else accesses my New Treasury Direct
account using my password?
363.22 Is Public Debt liable if the electronic transmission of my
data is intercepted?
363.23 What should I do if I become aware that my password has
become compromised?
363.24 What transactions can I perform online through my New
Treasury Direct account?
363.25 How do I conduct transactions in my account or in Treasury
securities held in my account?
363.26 What is a transfer?
363.27 May a New Treasury Direct account be opened in the name of a
minor?
363.28 What is the procedure for opening a New Treasury Direct
account for a minor?
363.29 How are transactions conducted in the minor's account?
363.30 What transactions are permitted in securities held in the New
Treasury Direct account of a minor?
363.31 How can a minor gain control of his or her account when he or
she reaches the age of 18 years?
363.32 Does Public Debt assume any liability for any transactions
conducted by a parent or legal guardian in the minor's account?
363.33 Can an attorney-in-fact conduct transactions in my New
Treasury Direct account?
363.34 What happens if an owner becomes incompetent after opening a
New Treasury Direct account?
363.35 When is a transaction effective?
363.36 What securities can I purchase and hold in my New Treasury
Direct account?
363.37 How do I purchase eligible Treasury securities to be held in
my New Treasury Direct account?
363.38 What happens if the ACH debit for purchase of a book-entry
Series I savings bonds is returned by my financial institution?
363.39 Will I receive a confirmation of my request to purchase a
Treasury security?
363.40 How are payments of principal and interest made?
363.41 What happens if an ACH payment of principal or interest to my
account at a financial institution is returned to Public Debt?
363.42 How will my interest income be reported for tax purposes?
363.43 What are the procedures for certifying my signature on an
offline application for a New Treasury Direct account, or on an
offline transaction form?
363.44-363.49 [Reserved]
Subpart C--Book-Entry Series I Savings Bonds
General
363.50 What Treasury securities does this subpart cover?
363.51 Who may purchase and hold a book-entry Series I savings
bonds?
363.52 What amount of book-entry Series I savings bonds may I
purchase in one year?
363.53 What is the minimum amount of book-entry Series I savings
bonds that I may purchase in any transaction?
363.54 What is the minimum amount of a book-entry Series I savings
bonds that I must hold in my account?
363.55 May I transfer my book-entry savings bonds to another person?
363.56 What is the minimum amount of book-entry Series I savings
bonds that I may transfer in any one transaction?
363.57 What is the minimum amount of book-entry Series I savings
bonds that I may redeem in any one transaction?
363.58 May book-entry Series I savings bonds be pledged or used as
collateral?
363.59-363.64 [Reserved]
Registration
363.65 What do I need to know about the registration of book-entry
Series I savings bonds?
363.66 What forms of registration are available for book-entry
Series I savings bonds?
363.67 What do I need to know about the single owner form of
registration?
363.68 What do I need to know about the owner with beneficiary form
of registration?
363.69 What do I need to know about the primary owner with secondary
owner form of registration?
363.70 What are special forms of registration?
363.71 What special forms of registration are permitted?
363.72-363.79 [Reserved]
Minors
363.80 May a minor purchase book-entry Series I savings bonds?
363.81 May book-entry Series I savings bonds be purchased for a
minor as a gift?
363.82 May an account owner deliver a book-entry Series I savings
bonds purchased as a gift to a minor?
363.83 May an account owner transfer a book-entry Series I savings
bonds to a minor?
363.84 [Reserved]
Incompetent Person
363.85 May Series I savings bonds be registered in the name of an
incompetent person for whom a legal guardian has been appointed?
363.86-363.89 [Reserved]
Deceased Owners
363.90 What happens when a New Treasury Direct account owner dies
and his or her estate is entitled to Series I savings bonds held in
the account?
363.91-363.94 [Reserved]
Gifts
363.95 How may I give a book-entry Series I savings bonds as a gift?
363.96 What do I need to know if I initially purchase a bonds as a
gift?
363.97 What do I need to know if I transfer a book-entry Series I
savings bonds to another person as a gift?
363.98 [Reserved]
363.99 What is the minimum amount of a bond that I may transfer or
deliver as a gift in any one transaction?
363.100-363.104 [Reserved]
Transactions
363.105 Who has the right to conduct transactions in book-entry
Series I savings bonds?
363.106 How are online transactions conducted in Series I savings
bonds?
363.107 Does Public Debt reserve the right to require that any
transactions be conducted offline?
363.108-363.109 [Reserved]
Judicial and Administrative Proceedings
363.110 Will Public Debt recognize a court order that attempts to
defeat the survivorship rights of a beneficiary, secondary owner, or
recipient of an undelivered gift bond?
363.111 Will Public Debt accept notice of an adverse claim or notice
of pending judicial proceedings involving book-entry Series I
savings bonds?
363.112 Is Public Debt a proper party in a judicial proceeding
involving competing
[[Page 64287]]
claims to a book-entry Series I savings bonds?
363.113 Will Public Debt pay or transfer book-entry Series I savings
bonds pursuant to an order in a divorce proceeding?
363.114 Will Public Debt recognize a court order?
363.115 Will Public Debt pay a savings bonds pursuant to a levy?
363.116 Will Public Debt pay a bond to the Internal Revenue Service
(IRS) pursuant to a levy?
363.117 Will Public Debt pay a bond to a trustee in bankruptcy or
similar court officer?
363.118 What evidence is required to establish the validity of
judicial proceedings?
363.119 Will Public Debt pay a bond pursuant to a forfeiture
proceeding?
363.120-363.124 [Reserved]
Payment
363.125 How is payment made on a book-entry Series I savings bonds?
363.126 Under what circumstances will payment be made?
363.127-363.129 [Reserved]
Subparts C through E--[Reserved]
Subpart F--Miscellaneous
363.175 May Public Debt waive these regulations?
363.176 Can I be required to provide additional evidence to support
a transaction?
363.177 May Public Debt amend or supplement these regulations?
Authority: 5 U.S.C. 301; 31 U.S.C. 3102, et seq., 3105 and 3125;
12 U.S.C. 391
Subpart A--General
Sec. 363.0 What is the New Treasury Direct system?
The New Treasury Direct system (New Treasury Direct) is an online
account system in which you may hold and conduct transactions in
eligible book-entry Treasury securities.
Sec. 363.1 What Treasury securities are covered by these regulations?
The regulations in this part apply to book-entry Treasury
securities held in the New Treasury Direct system.
Sec. 363.2 What agency administers New Treasury Direct?
The Bureau of the Public Debt (Public Debt), Department of the
Treasury (Treasury) is responsible for administering New Treasury
Direct. Public Debt may delegate authority to process certain
transactions in New Treasury Direct to Federal Reserve Banks and
Branches as fiscal agents of the United States.
Sec. 363.3 What Treasury securities may be held in New Treasury
Direct?
Initially, only book-entry Series I savings bonds may be held in
New Treasury Direct. We intend to offer other Treasury securities to be
held in New Treasury Direct in future releases to the system.
Sec. 363.4 How is New Treasury Direct different from the
TreasuryDirect system?
New Treasury Direct is an online (Internet-based) system. The
existing TreasuryDirect system (TreasuryDirect) is a separate book-
entry system, available since 1986, for marketable Treasury securities
only. The terms and conditions for TreasuryDirect are found at part
357, and are substantially different from the terms and conditions of
securities held in New Treasury Direct.
Sec. 363.5 How do I contact Public Debt?
(a) Emails may be sent to:
<[email protected]. We will reply by e-mail
unless you request otherwise. We are not responsible for the security
of e-mail messages you may send to us, or replies we may send to you.
(b) Letters should be addressed to: Bureau of the Public Debt, New
Treasury Direct, Parkersburg, WV 26106-1328.
Sec. 363.6 What special terms do I need to know to understand this
part?
Account means a New Treasury Direct account as described in Sec.
363.15.
Authentication service means a public or private service that
authenticates the identity of an online applicant for a New Treasury
Direct account using information provided by the applicant.
Automated Clearing House (ACH) means a funds transfer system
governed by the Rules of the National Automated Clearing House
Association (NACHA). NACHA provides for the interbank clearing of
electronic entries for participating financial institutions.
Beneficiary refers to the second individual named in the
registration of a security held in the New Treasury Direct system
registered ``John Doe SSN 123-45-6789 POD (payable on death to) Joseph
Doe SSN 987-65-4321.'' In this example, Joseph Doe is the beneficiary.
Book-entry security means a Treasury security maintained by us in
electronic or paperless form as a computer record.
Business day means any day that funds may be settled through ACH.
Court means a court of law with jurisdiction over the parties and
the subject matter.
Definitive security means a Treasury security held in paper form.
Delivery means moving a minimum amount of $25 (consisting of
principal and proportionate interest) of a security held as a gift from
the account of the purchaser to the account of the recipient.
Depository financial institution means an entity described in 12
U.S.C. 461 (b)(1)(A)(i)-(vi).
Federal Reserve Bank (Reserve Bank) means a Federal Reserve Bank or
Branch.
Final maturity of a savings bonds means the date beyond which an
unredeemed savings bonds no longer earns interest.\1\
---------------------------------------------------------------------------
\1\ 1 Series I savings bonds have a maturity period of 30 years,
consisting of an original maturity period of 20 years and an
extension period of 10 years.
---------------------------------------------------------------------------
Gift means a Treasury security purchased for or transferred to an
intended recipient, without consideration.
Individual means a natural person. Individual does not mean an
organization, representative, or fiduciary.
Interest on a savings bonds means the difference between the
principal (par) and the redemption value of the bond.
Legal guardian of a minor or incompetent person refers to the
court-appointed or otherwise qualified person, regardless of title, who
is legally authorized to act for the minor or incompetent individual.
Legal representative refers to the court-appointed or otherwise
qualified person, regardless of title, who is legally authorized to
manage and settle the estate of a decedent. The term includes an
executor and an administrator.
Legally incompetent means a court has declared an individual to be
incapable of handling his or her business affairs.
Minor means an individual who is under the age of 18 years.
Online means use of the Internet.
Owner is either a single owner, the first person named in the
registration of a security held in the owner with beneficiary form of
registration, or the primary owner of a security held in the primary
owner with secondary owner form of registration.
Person means an entity including an individual, trust, estate,
corporation, government entity, association, partnership, and any other
similar organization. Person does not mean a Federal Reserve Bank.
Primary owner means the first person named in the registration of a
security held in New Treasury Direct registered, e.g., ``John Doe SSN
123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this example, John
Doe is the primary owner.
Principal amount means the amount of the original investment.
Principal
[[Page 64288]]
amount does not include any interest earned.
Recipient means the person to whom a gift is given.
Redemption of a savings bonds refers to the payment of principal
and interest at final maturity, or prior to final maturity at the
option of the owner. The owner may redeem all principal and interest or
a portion of the principal and the proportionate amount of interest.
Redemption value means principal plus accrued interest of a bond,
or a portion of the principal plus a proportionate amount of accrued
interest on the bond, as of the date of redemption.
Registration or Registered means that the name and taxpayer
identification number(s) (TIN) of the person(s) named on the security
are maintained on our records.
Secondary owner means the second person named in the registration
of a book-entry security held in New Treasury Direct registered, e.g.
``John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this
example, Joseph Doe is the secondary owner.
Security, or Treasury security, as used in this part, means an
obligation issued by Treasury that may be held in New Treasury Direct.
Series I savings bonds is a savings bonds, either in definitive
(paper) form or in book-entry form, that sells at par and pays interest
in accordance with a formula that includes a fixed component and a
component indexed to the rate of inflation.
Signature guarantee program means a signature guarantee program
established under 17 CFR 240.17Ad-15, issued under authority of the
Securities Exchange Act of 1934. For the purpose of this part, we
recognize the Securities Transfer Agents Medallion Program (STAMP), the
Stock Exchanges Medallion Program (SEMP), and the New York Stock
Exchange, Inc., Medallion Signature Program (MSP). These certifications
are acceptable for transfers of securities, but are not acceptable for
offline account establishment.
Single owner means the person named in the registration of a book-
entry Treasury security without a beneficiary or secondary owner.
Social security account number or social security number (SSN)
means the identifying number required on tax returns and other
documents submitted to the Internal Revenue Service by an individual. A
SSN is composed of nine digits separated by two hyphens, for example,
123-45-6789.
Taxpayer identification number (TIN) means the identifying number
required on tax returns and other documents submitted to the Internal
Revenue Service; that is, an individual's social security number (SSN)
or an employer identification number (EIN). A SSN is composed of nine
digits separated by two hyphens, for example, 123-45-6789. An EIN is
composed of nine digits separated by one hyphen, for example, 12-
3456789. The hyphens are an essential part of the numbers.
Transaction is any action affecting Treasury securities or account
information.
Transfer means moving a minimum amount of $25 (consisting of
principal and proportionate interest) of a security from one New
Treasury Direct account to another New Treasury Direct account in a
transaction involving a change in the ownership of the security. The
transfer of a specific security may be restricted by the terms of this
part that apply to that security.
We, us, or our refers to the Bureau of the Public Debt. The term
includes the Secretary of the Treasury and the Secretary's delegates at
the Treasury Department and Bureau of the Public Debt. The term also
includes any fiscal or financial agent we designate to act on behalf of
the United States.
You or your refers to a New Treasury Direct account holder.
Sec. Sec. 363.7-363.14 [Reserved]
Subpart B--New Treasury Direct System
Sec. 363.15 What is a New Treasury Direct account?
A New Treasury Direct account is an online account maintained by us
solely in your name in which you may hold and conduct transactions in
eligible book-entry Treasury securities. Your New Treasury Direct
account may contain Treasury securities that are your personal
holdings, gifts that have not yet been delivered, and Treasury
securities that you hold on behalf of someone else, as permitted by
these regulations.
Sec. 363.16 Who is eligible to open a New Treasury Direct account?
In order to open a New Treasury Direct account, you must:
(a) Have a valid social security number;
(b) Have a United States address of record;
(c) Have an account at a United States depository financial
institution that will accept debits and credits using the Automated
Clearing House method of payment;
(d) Be 18 years of age or over;
(e) Be legally competent; and
(f) Be an individual.
Sec. 363.17 How can I open a New Treasury Direct account?
You must establish a New Treasury Direct account online before you
purchase a Treasury security to be held in your account. Instructions
for online account establishment may be found at the official Public
Debt website at http://www.publicdebt.treas.gov, or such other Internet
address as Public Debt may from time to time announce by publication in
the Federal Register. When you have completed the application, you will
create a password to access your account. We will authenticate your
identity and send your account number to you by email when your account
application is approved.
Sec. 363.18 How will you authenticate my identity?
We may use an online authentication service to authenticate your
identity using information you provide about yourself on the
application. At our option, we may require offline authentication.
Sec. 363.19 What is the procedure for offline authentication?
In the event we require offline authentication, we will provide a
printable authentication form. Your signature on the form must be
certified or guaranteed as provided at Sec. 363.43, and the form must
be mailed to us at the address provided in Sec. 363.5.
Sec. 363.20 How do I access my account?
You may access your account online using your account number and
password.
Sec. 363.21 Who is liable if someone else accesses my New Treasury
Direct account using my password?
You are solely responsible for the confidentiality and use of your
password. We will treat any transactions conducted using your password
as having been authorized by you. We are not liable for any loss,
liability, cost or expense that you may incur as a result of
transactions made using your password.
Sec. 363.22 Is Public Debt liable if the electronic transmission of
my data is intercepted?
We are not liable for any interception of electronic data or
communication.
Sec. 363.23 What should I do if I become aware that my password has
become compromised?
You should change your password immediately if you become aware
that your password has become compromised. If you become aware of any
misuse of your password, you
[[Page 64289]]
should notify us by email at [email protected] or call us
at 304-480-8783.
Sec. 363.24 What transactions can I perform online through my New
Treasury Direct account?
The following transactions are by way of illustration only, and are
not intended to limit transactions that may be added to the system in
the future:
(a) You can purchase eligible Treasury securities in your own right
or as gifts;
(b) You can redeem savings bonds;
(c) You can make changes to the registration of securities held in
your account on which you are the single owner, owner with beneficiary,
or primary owner;
(d) You can transfer a Treasury security to another person;
(e) You can grant and revoke the right to view a security held in
your account to any other New Treasury Direct account owner, providing
the security is:
(1) in the single owner form of registration, and
(2) not being held in your account as a gift;
(f) You can grant and revoke the right to view a security held in
your account to the beneficiary named in the registration of the
security, if the beneficiary is a New Treasury Direct account owner;
(g) You can grant and revoke the right to view or the rights to
view and redeem a security on which you are the primary owner to the
secondary owner, if the secondary owner is a New Treasury Direct
account owner;
(h) You can view or redeem Treasury securities on which you are the
secondary owner, if the primary owner has granted those rights to you,
and if you are a New Treasury Direct account owner;
(i) You can deliver gift Treasury securities to the New Treasury
Direct account of another person;
(j) You can make changes to your account information;
(k) You can change your ACH information;
(l) You can view a history of purchases, transactions, and pending
transactions;
(m) You can change or delete pending transactions;
(n) You can change your password; and
(o) You can change account security information.
Sec. 363.25 How do I conduct transactions in my account or in
Treasury securities held in my account?
We will provide online instructions for conducting transactions
through your account. If you are unable to conduct a transaction
online, you should contact us at the address provided in Sec. 363.5.
Offline transactions will require a certified or guaranteed signature.
See Sec. 363.43 for instructions for obtaining a certified or
guaranteed signature.
Sec. 363.26 What is a transfer?
(a) A transfer is a transaction to move a minimum amount of $25
(consisting of principal and proportionate interest) of a Treasury
security from one New Treasury Direct account to another New Treasury
Direct account, in which the ownership of the security changes.
(b) Transfers of a specific type of security may be limited by the
subparts that refer to that security.
Sec. 363.27 May a New Treasury Direct account be opened in the name
of a minor?
A parent or legal guardian may open an account for a minor. The
parent or legal guardian must have an existing New Treasury Direct
account in order to open the minor's account. The parent or legal
guardian will open the minor's account through the New Treasury Direct
account of the parent or guardian. The account will be held in the name
and SSN of the minor.
Sec. 363.28 What is the procedure for opening a New Treasury Direct
account for a minor?
Online instructions will be provided to the parent or legal
guardian of a minor for establishing an account for a minor child. The
parent or legal guardian will select the password for the account. The
parent or legal guardian must certify that he or she is acting on
behalf of the minor, and that all transactions conducted through the
account will be on the minor's behalf.
Sec. 363.29 How are transactions conducted in the minor's account?
The parent or guardian must conduct all transactions in the minor's
account on behalf of the minor.
Sec. 363.30 What transactions are permitted in securities held in the
New Treasury Direct account of a minor?
We will not permit purchases or transfers to be conducted from the
account of a minor. Treasury securities may be transferred to the
minor's account, and gift Treasury securities may be delivered to the
minor's account.
Sec. 363.31 How can a minor gain control of his or her account when
he or she reaches the age of 18 years?
The parent or legal guardian who opened the account on the minor's
behalf must provide the minor with the password and control of the
account when the minor reaches the age of 18 years. If the parent or
guardian fails to provide the password and control of the account to
the minor when he or she reaches the age of 18 years, the minor may
contact us for instructions.
Sec. 363.32 Does Public Debt assume any liability for any
transactions conducted by a parent or legal guardian in the minor's
account?
We assume no liability for any transactions conducted by any person
in an account opened on behalf of a minor.
Sec. 363.33 Can an attorney-in-fact conduct transactions in my New
Treasury Direct account?
(a) An attorney-in-fact who provides a copy of a durable power of
attorney granting him or her the authority to conduct New Treasury
Direct transactions on behalf of the owner may conduct transactions
online.
(b) An attorney-in-fact who provides a copy of a limited power of
attorney may only conduct transactions that he or she is permitted by
his or her power. Such transactions will be through an offline process.
(c) A written copy of the power of attorney must be sent to the
address provided in Sec. 363.5. We may require any additional evidence
that we consider necessary to support the power.
Sec. 363.34 What happens if an owner becomes incompetent after
opening a New Treasury Direct account?
If we receive written notice that the owner of a New Treasury
Direct account has become incompetent, we will suspend all transactions
in the account until we establish the authority of another person to
act in his or her behalf.
Sec. 363.35 When is a transaction effective?
A transaction is effective when we post it to our records.
Sec. 363.36 What securities can I purchase and hold in my New
Treasury Direct account?
You can purchase and hold eligible Treasury securities in your
account. Initially, the only eligible securities will be book-entry
Series I savings bonds. We intend to designate additional Treasury
securities as eligible securities from time to time.
Sec. 363.37 How do I purchase eligible Treasury securities to be held
in my New Treasury Direct account?
Eligible Treasury securities can only be purchased online through
your New Treasury Direct account. Payment for the securities is made by
a debit to your designated account at a United States
[[Page 64290]]
depository financial institution using the ACH method.
Sec. 363.38 What happens if the ACH debit for purchase of a book-
entry Series I savings bonds is returned by my financial institution?
If your designated financial institution returns the ACH debit for
payment of a bond, we reserve the right to reinitiate the debit at our
option, and to remove the bond from your New Treasury Direct account.
We are not responsible for any fees your financial institution may
charge relating to returned ACH debits.
Sec. 363.39 Will I receive a confirmation of my request to purchase a
Treasury security?
At the time that you submit a request to purchase a Treasury
security through your New Treasury Direct account, we will make
available a printable online confirmation of your request. Final
confirmation will occur when the security is issued into your account.
You will not receive a mailed confirmation.
Sec. 363.40 How are payments of principal and interest made?
You must select a specific bank account at a United States
depository financial institution for your payment. This selected bank
account may be the same one that you designated as your primary bank
account in your New Treasury Direct account, or it may be a different
bank account. We will make payments using the ACH method.
Sec. 363.41 What happens if an ACH payment of principal or interest
to my account at a financial institution is returned to Public Debt?
We will notify you electronically of the returned payment. We will
hold your payment until you provide us with instructions. Returned
payments will not earn interest. We reserve the right to redirect
returned payments to the bank account at a financial institution that
you have designated in your New Treasury Direct account as your primary
bank account, if that account is different from the one that returned
the payment to us. We are not responsible for any fees your financial
institution may charge relating to returned ACH payments.
Sec. 363.42 How will my interest income be reported for tax purposes?
When you open your New Treasury Direct account, you consent to
receive the appropriate tax reporting forms by electronic means. We
will notify you when your tax reporting forms are available. The form
will be available in printable form through your New Treasury Direct
account. If you withdraw your consent to receive tax reporting forms by
electronic means, we reserve the right to redeem any Series I savings
bonds held in your account and close your account.
Sec. 363.43 What are the procedures for certifying my signature on an
offline application for a New Treasury Direct account, or on an offline
transaction form?
(a) Certification within the United States. For certifications
within the United States, the certifying individual must be authorized
to bind his or her institution by his or her acts, to guarantee
signatures to assignments of securities, or to certify assignments of
securities. The following table provides a list of authorized
certifying individuals and the required evidence of authority. Members
of Treasury-recognized signature guarantee programs are for security
transfers only.
------------------------------------------------------------------------
Evidence of certifying
Who can certify signatures in the U.S. individual's authority
------------------------------------------------------------------------
(1) Officers and employees of (i) We require the
depository institutions. institution's seal or
signature guarantee stamp.
(ii) If the institution is an
authorized paying agent for
U.S. Savings Bonds, we require
a legible imprint of the
paying agent's stamp.
(2) Institutions that are members of We require the imprint of the
Treasury--recognized signature signature guarantee stamp,
guarantee programs (for security i.e., the STAMP, SEMP, or MSP
transfers only). stamp for members of the
Securities Transfer Agents
Medallion Program, the Stock
Exchanges Medallion Program,
or the New York Stock Exchange
Inc. Medallion Signature
Program.
(3) Officers and employees of corporate We require the entity's seal.
central credit unions, Federal Land
Banks, Federal Intermediate Credit
Banks and Banks for Cooperatives, the
Central Bank for Cooperatives, and
Federal Home Loan Banks.
(4) Commissioned or warrant officers of (i) We require a statement that
the United States Armed Forces, for the person executing he
signatures executed by Armed Forces assignment is one whose
personnel, civilian field employees, signature the officer is
and members of their families. authorized to certify under
our regulations.
(ii) The certifying official's
rank must be shown.
(5) A judge or clerk of the court...... We require the seal of the
court.
(6) Other persons as designated by the Evidence is determined by our
Commissioner or Deputy Commissioner of procedures.
Public Debt.
------------------------------------------------------------------------
(b) Certification within foreign countries. The following table
lists the authorized certifying individuals for foreign countries and
the required evidence of the individual's authority.
------------------------------------------------------------------------
Who can certify signatures in foreign Evidence of certifying
countries individual's authority
------------------------------------------------------------------------
(1) United States diplomatic or (i) We require the seal or
consular officials. stamp of the office.
(ii) If there is no seal or
stamp, then we require
certification by some other
authorized individual, under
seal or stamp.
(2) Managers and officers of foreign We require the seal of the
branches of U.S. depository depository institution, or the
institutions and institutions that are imprint of the signature
members of Treasury-recognized guarantee stamp, i.e., the
signature guarantee programs (for STAMP, SEMP, or MSP stamp for
security transfers only). members of the Securities
Transfer Agents Medallion
Program, the Stock Exchanges
Medallion Program, or the New
York Stock Exchange
Incorporated Medallion
Signature Program.
(3) Notaries Public and other officers (i) We require the official
authorized to administer oaths, seal or stamp of the office.
provided their authority is certified (ii) If there is no seal or
by a United States diplomatic or stamp, the position must be
consular official. certified by some other
authorized individual, under
seal or stamp, or otherwise
proved to our satisfaction.
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[[Page 64291]]
(c) Duties and liabilities of certifying individuals.
(1) The certifying individual must first establish the identity of
the signer.
(2) The form must be signed in the presence of the certifying
individual.
(3) If the certifying individual is not an officer, the certifying
individual must insert the words ``Authorized Signature'' in the space
provided for the title.
(4) If the certifying individual is negligent in making the
certification, the certifying individual and his or her organization
are jointly and severally liable for any loss the United States may
incur as a result of the negligence.
(d) Guaranteed signatures. (1) A security or other form requiring
certification need not be executed in the presence of a certifying
individual if the signature is unconditionally guaranteed by the
certifying individual. To guarantee a signature, the certifying
individual must add a dated endorsement after the signature. For
example:
Signature guaranteed, First National Bank of Smithville, Smithville,
NH, by A. B. Doe, President, dated 1/1/2001.
(2) The certifying individual and his or her organization
unconditionally guarantee to us that the signature is genuine and the
signer had the legal capacity to execute the assignment or related
form.
(e) Guaranteed absence of a signature. (1) A form requiring a
certified signature need not be signed when a certifying individual
associated with a depository financial institution places the following
endorsement on the security or the form:
Absence of signature by owner and validity of transaction
guaranteed, Second State Bank of Jonesville, Jonesville, NC, by B.
R. Butler, Vice President, dated 11/1/2001.
(2) The endorsement must be dated and the seal of the institution
must be added.
(3) This form of endorsement is an unconditional guarantee to us
that the institution is acting for the signer under proper
authorization.
(f) Persons who cannot act as certifying individuals. Any person
having an interest in a security involved in the transaction cannot act
as a certifying individual. However, an authorized officer or employee
of a depository financial institution that is a member of a Treasury-
recognized signature guarantee program can act as a certifying
individual for transfer of a security to the institution or on behalf
of the institution.
Sec. Sec. 363.44-363.49 [Reserved]
Subpart C--Book-Entry Series I Savings Bonds
General
Sec. 363.50 What Treasury securities does this subpart cover?
This subpart covers book-entry Series I savings bonds only. As we
designate other securities as eligible to be held in New Treasury
Direct, the applicable terms and conditions will be set forth in
separate subparts. The offering of Series I savings bonds is contained
in part 359.
Sec. 363.51 Who may purchase and hold a book-entry Series I savings
bonds?
(a) A New Treasury Direct account holder may purchase and hold
bonds through his or her account.
(b) Bonds may not be purchased through the account of a minor.
(c) We do not permit a legally incompetent person to purchase
savings bonds once we have been provided with an acceptable court order
determining incompetency.
(d) We do not permit a legal representative or a legal guardian to
purchase savings bonds on behalf of the estate of a decedent or an
incompetent person.
Sec. 363.52 What amount of book-entry Series I savings bonds may I
purchase in one year?
(a) Purchase limitation. The amount of bonds that you may purchase
in any calendar year is limited to $30,000 per account.
(b) Computation of amount for gifts. Bonds purchased or transferred
as gifts will be included in the computation of the purchase limitation
for the account of the recipient for the year in which the bonds are
delivered to the recipient.
Sec. 363.53 What is the minimum amount of book-entry Series I savings
bonds that I may purchase in any transaction?
Each bond purchase must be in a minimum amount of $25, with
additional one-cent increments above that amount, in any one
transaction. For example, a purchase may be $25.00, $25.01, $25.02, or
$25.03, and so forth.
Sec. 363.54 What is the minimum amount of a book-entry Series I
savings bonds that I must hold in my account?
Each bond held in your account must have a redemption value of at
least $25. If you request a transaction that would reduce the remaining
redemption value of the bond to an amount less than $25, we will not
permit the transaction to occur.
Sec. 363.55 May I transfer my book-entry savings bonds to another
person?
(a) You may transfer a bond or a portion of a bond to the New
Treasury Direct account of another individual as a gift, or in response
to a final judgment, court order, a divorce decree, or property
settlement agreement. You must certify online that the transfer is a
gift or a specified exception.
(b) We do not permit the transfer of Series I savings bonds for
consideration, unless it is an exception specified in paragraph (a) of
this section.
(c) The bond will be transferred in the single owner form of
registration.
(d) We reserve the right to limit the transferability of Series I
savings bonds at any time by amendment to these regulations.
Sec. 363.56 What is the minimum amount of book-entry Series I savings
bonds that I may transfer in any one transaction?
Each transfer must be in a minimum amount of $25 redemption value,
with additional one-cent increments above that amount, in any one
transaction. For example, you may transfer $25.00, $25.01, $25.02, or
$25.03, and so forth. Transfers will be comprised of principal and
proportionate interest.
Sec. 363.57 What is the minimum amount of book-entry Series I savings
bonds that I may redeem in any one transaction?
Each redemption must be in a minimum amount of $25 redemption
value, with additional one-cent increments above that amount, in any
one transaction. For example, you may redeem $25.00, $25.01, $25.02, or
$25.03, and so forth. Redemptions will be comprised of principal and
proportionate interest.
Sec. 363.58 May book-entry Series I savings bonds be pledged or used
as collateral?
Bonds may not be pledged or used as collateral for the performance
of an obligation.
Sec. Sec. 363.59-363.64 [Reserved]
Registration
Sec. 363.65 What do I need to know about the registration of book-
entry Series I savings bonds?
(a) Registration must express the actual ownership of, and interest
in, the bond. Registration conclusively establishes ownership of a
bond.
(b) You must provide a last name and a first name for each
individual included in the registration.
(c) You must provide the valid social security number of the owner
of the bond.
[[Page 64292]]
Sec. 363.66 What forms of registration are available for book-entry
Series I savings bonds?
The forms of registration available are single owner, owner with
beneficiary, primary owner with secondary owner, and several special
forms of registration.
Sec. 363.67 What do I need to know about the single owner form of
registration?
(a) An individual is the single owner of the bond.
(b) A single owner may add a beneficiary or secondary owner.
(c) A single owner may conduct online transactions on bonds held in
his or her account.
(d) Upon the death of the single owner, his or her estate is
entitled to the bond. In determining entitlement, the law of the
decedent's domicile will be followed.
(e) Registration example: ``John Doe, SSN 123-45-6789.''
Sec. 363.68 What do I need I need to know about the owner with
beneficiary form of registration?
(a) The purchaser must be named as the owner with another
individual as beneficiary.
(b) The owner may remove or change the beneficiary without the
consent of the beneficiary.
(c) The owner may conduct online transactions on bonds held in his
or her account without the consent of the beneficiary.
(d) The beneficiary has no ownership rights to the bond during the
owner's lifetime. Upon the death of the owner, the beneficiary is the
absolute owner of the bond, despite any attempted testamentary
disposition by the owner or any state law to the contrary.
(e) If the beneficiary does not survive the owner, the bond belongs
to the estate of the owner.
(f) If both the owner and the beneficiary die under conditions
where it cannot be established, either by presumption of law or
otherwise, which one died first, the bond is the property of the estate
of the owner.
(g) In order for the beneficiary to obtain the bond or the bond
proceeds after the death of the owner, the beneficiary must provide
proof of death of the owner. If the beneficiary has a New Treasury
Direct account, the bond will be transferred to that account. If the
beneficiary does not have an account, he or she may establish an
account or request redemption. If the beneficiary requests redemption,
he or she must provide ACH instructions for the payment.
(h) Registration example: ``John Doe, SSN 123-45-6789 POD (payable
on death to) Jane Doe, SSN 987-65-4321.''
Sec. 363.69 What do I need to know about the primary owner with
secondary owner form of registration?
(a) The purchaser must be named in the registration as the primary
owner.
(b) The primary owner holds the bonds in his or her account and may
view or conduct online transactions in the bonds.
(c) The primary owner may remove the secondary owner without the
consent of the secondary owner.
(d) The secondary owner has no rights to view or conduct
transactions in any bond unless the primary owner gives the secondary
owner these rights.
(e) The primary owner may give the secondary owner the right to
view any bond or rights to view and redeem any bond, online from the
account of the secondary owner.
(f) Once the right to conduct transactions in a bond has been given
to the secondary owner, the primary owner may view and conduct
transactions in the bond from his or her account, and the secondary
owner may view and redeem the bond using his or her own account.
(g) The primary owner may revoke any rights previously given to the
secondary owner at any time.
(h) Upon the death of either the primary or secondary owner, the
survivor is the absolute owner of the bond, despite any attempted
testamentary disposition or any state law to the contrary.
(i) If both the primary and the secondary owner die under
conditions where it cannot be established, either by presumption of law
or otherwise, which one died first, the bond is the property of the
estate of the primary owner.
(j) In order for the secondary owner to obtain the bond or the bond
proceeds after the death of the owner, the secondary owner must provide
proof of death of the owner. If the secondary owner has a New Treasury
Direct account, the bond will be transferred to that account. If the
secondary owner does not have an account, he or she may establish an
account or request redemption. If the secondary owner requests
redemption, he or she must provide ACH instructions.
(k) Registration example: ``John Doe, SSN 123-45-6789 with Joseph
Doe, SSN 987-65-4321.''
Sec. 363.70 What are special forms of registration?
(a) Special forms of registration are used when a legal guardian or
representative is appointed by a court to handle the affairs of a
decedent or an incompetent individual.
(b) Special forms of registration are not permitted on original
issue.
(c) Bonds registered in this form may be held in the New Treasury
Direct account of the legal guardian or representative.
Sec. 363.71 What special forms of registration are permitted?
(a) Legal guardian of the estate of an incompetent individual. A
court-appointed legal guardian may hold bonds on behalf of an
incompetent individual.
(b) Legal representative of the estate of a decedent. A court-
appointed legal representative of the estate of a decedent may hold
bonds on behalf of the estate.
(c) General rule. Bonds registered in the name of a legal guardian
of an incompetent person or legal representative of an estate will be
held in the New Treasury Direct account of the legal guardian or legal
representative.
Sec. Sec. 363.72-363.79 [Reserved]
Minors
Sec. 363.80 May a minor purchase book-entry Series I savings bonds?
We do not permit a minor to purchase bonds.
Sec. 363.81 May book-entry Series I savings bonds be purchased for a
minor as a gift?
A New Treasury Direct account owner may purchase bonds as a gift
with a minor as the recipient.
Sec. 363.82 May an account owner deliver a book-entry Series I
savings bonds purchased as a gift to a minor?
An account owner may deliver a bond purchased as a gift to the New
Treasury Direct account of the recipient who is a minor.
Sec. 363.83 May an account owner transfer a book-entry Series I
savings bonds to a minor?
An account owner may transfer a bond to a minor as a gift or
pursuant to one of the specified exceptions in Sec. 363.55(a).
Sec. 363.84 [Reserved]
Incompetent Person
Sec. 363.85 May Series I savings bonds be registered in the name of
an incompetent person for whom a legal guardian has been appointed?
(a) If a person owning bonds becomes incompetent, and there is a
legally qualified guardian, the bonds must be registered in the name of
the guardian.
(b) We will require satisfactory evidence of appointment.
(c) Registration will be as follows: ``John Doe, SSN 123-45-6789,
Legal Guardian of the estate of James Doe, an incompetent, SSN 987-65-
4321.''
[[Page 64293]]
Sec. Sec. 363.86-363.89 [Reserved]
Deceased Owners
Sec. 363.90 What happens when a New Treasury Direct account owner
dies and his or her estate is entitled to Series I savings bonds held
in the account?
(a) Estate is being administered. (1) We will require appropriate
proof of appointment for the legal representative of the estate.
Letters of appointment must be dated within six months of submission,
unless the appointment was made within one year before submission.
(2) The bonds will be registered in the following form: ``John Doe,
SSN 123-45-6789, Legal Representative of the estate of James Doe,
deceased, SSN 987-65-4321.''
(3) The bonds may be held in the New Treasury Direct account of the
legal representative.
(4) The legal representative of the estate may request payment of
bonds to the estate or to the person(s) entitled, or may have the bonds
transferred to the New Treasury Direct account(s) of the person(s)
entitled.
(5) The legal representative of the estate may not purchase bonds
on behalf of the estate.
(6) If payment is requested, we will require ACH instructions.
(b) Estate has been settled previously. If the estate has been
previously settled through judicial proceedings, the person(s) entitled
may request payment of bonds or may have the bonds transferred to the
New Treasury Direct account of the person(s) entitled. If payment is
requested, we will require ACH instructions. We will require a
certified copy of the court-approved final accounting for the estate,
the court's decree of distribution, or other appropriate evidence.
(c) Summary administration procedures. If there is no formal
administration and no representative of the estate is to be appointed,
the person(s) entitled under state law summary or small estates
procedures may request payment of bonds or may have the bonds
transferred to the New Treasury Direct account(s) of the person(s)
entitled. We will require appropriate evidence. If payment is
requested, we will require ACH instructions.
(d) Survivors' order of precedence for payment or transfer. If
there has been no administration, no administration is contemplated, no
summary or small estate procedures have been used, and the redemption
value of the bonds is $100,000 or less,\2\ then bonds may be paid or
transferred to the persons named in the following order of precedence:
---------------------------------------------------------------------------
\2\ We require estates with bonds over $100,000 redemption value
to be administered.
---------------------------------------------------------------------------
(1) There is a surviving spouse and no surviving child or
descendant of a deceased child: to the surviving spouse.
(2) There is a surviving spouse and a child or children of the
decedent, or descendants of deceased children: one-half to the
surviving spouse and one-half to the child or children of the decedent,
and the descendants of deceased children, by representation, or by
agreement of all persons entitled in this class;
(3) There is no surviving spouse and there is a surviving child or
descendant of deceased children: to the child or children of the
decedent, and the descendants of deceased children, by representation.
(4) There are no surviving spouse, no surviving child, and no
surviving descendants of deceased children: to the parents of the
decedent, one-half to each, or in full to the survivor.
(5) There are no surviving spouse, no surviving child or surviving
descendants of deceased children, and no surviving parents: to the
brothers and sisters and descendants of deceased brothers and sisters
by representation.
(6) There are no surviving spouse, no surviving child or surviving
descendants of deceased children, no surviving parents, and no brothers
or sisters or descendants of deceased brothers and sisters: to other
next of kin, as determined by the laws of the decedent's domicile at
the time of death.
(7) There are no surviving spouse, no surviving child or surviving
descendants of deceased children, no surviving parents, no brothers or
sisters or descendants of deceased brothers and sisters, and no next of
kin, as determined by the laws of the decedent's domicile at the time
of death: to persons related to the decedent by marriage, i.e., heirs
of a spouse of the last decedent where the spouse predeceased that
registrant.
(8) There are no surviving spouse, no surviving child or surviving
descendants of deceased children, no surviving parents, no brothers or
sisters or descendants of deceased brothers and sisters, no next of
kin, as determined by the laws of the decedent's domicile at the time
of death, and no persons related to the decedent by marriage: to the
person who paid the burial and funeral expenses, or a creditor of the
decedent's estate, but payment may be made only to the extent that the
person has not been reimbursed. Transfers are not permitted.
(9) Escheat according to the applicable state law.
(e) When we make payments or transfers according to paragraph (d)
of this section, we will make the payments by the ACH method to either
a person individually, or individually and on behalf of all other
persons entitled. We will require ACH instructions for payment. A
person who receives payment of bond proceeds individually and on behalf
of others agrees to make distribution of the proceeds to the other
persons entitled by the law of the decedent's domicile. The provisions
of this section are for our convenience and do not determine ownership
of the bonds or their proceeds. We may rely on information provided by
the person who requests payment or transfer, and are not liable for any
action taken in reliance on the information furnished.
Sec. Sec. 363.91-363.94 [Reserved]
Gifts
Sec. 363.95 How may I give a book-entry Series I savings bonds as a
gift?
You may give a book-entry Series I savings bonds as a gift in two
ways:
(a) You may purchase a bond online as a gift; or
(b) You may transfer a bond that you own to another person as a
gift with immediate delivery.
Sec. 363.96 What do I need to know if I initially purchase a bond as
a gift?
(a) The gift bond will be registered in the name of the
recipient(s). The registration is irrevocable with regard to the owner
named on the gift bond.
(b) You must provide the SSN of the recipient.
(c) You may deliver the bond upon purchase, or you may hold the
bond in your New Treasury Direct account until you are ready to deliver
the bond to the owner named on the gift bond.
(d) If the purchaser dies before delivering a gift bond to the
recipient, the bond belongs to the owner named on the gift bond,
notwithstanding any testamentary attempts to the contrary by the
purchaser, or any state law to the contrary. We will hold the bond
until we receive instructions from the owner named on the gift bond.
(e) When the gift bond is delivered, it will be delivered in the
single owner form of registration to the owner named on the gift bond.
Sec. 363.97 What do I need to know if I transfer a book-entry Series
I savings bonds to another person as a gift?
(a) You must certify online that the transfer is a gift.
[[Page 64294]]
(b) You must provide the SSN of the recipient.
(c) Once the transfer is made, the gift is irrevocable.
(d) The bond will be transferred in the single owner form of
registration to the recipient.
Sec. 363.98 [Reserved]
Sec. 363.99 What is the minimum amount of a bond that I may transfer
or deliver as a gift in any one transaction?
You may transfer or deliver gift bonds in any one-cent increment
value equal to or greater than $25.00 redemption value. For example,
you may deliver a gift bond with a redemption value of $25.00, $25.01,
$25.02, and so forth. If the bond was held in your account prior to
delivery to the recipient for a period of time and has accrued
interest, the delivery will include principal and proportionate
interest.
Sec. Sec. 363.100-363.104 [Reserved]
Transactions
Sec. 363.105 Who has the right to conduct transactions in book-entry
Series I savings bonds?
(a) Single owner form of registration. A single owner can conduct
transactions in bonds held in his or her New Treasury Direct account.
(b) Owner with beneficiary form of registration. The owner can
conduct transactions in bonds held in his or her New Treasury Direct
account. The beneficiary has no rights during the lifetime of the owner
and therefore cannot conduct transactions in the bonds.
(c) Primary Owner with secondary owner form of registration. The
primary owner can conduct transactions in bonds held in his or her New
Treasury Direct account. The secondary owner can redeem bonds using his
or her New Treasury Direct account providing the primary owner has
given the secondary owner that right, and has not revoked that right.
(d) Legal guardian of an incompetent form of registration. A legal
guardian or other court-appointed representative of an incompetent can
conduct transactions in bonds belonging to the incompetent consistent
with the authority of the legal guardian.
(e) Legal representative of an estate. A legal representative of an
estate can conduct transactions in bonds belonging to the estate
consistent with the authority of the legal representative.
Sec. 363.106 How are online transactions conducted in Series I
savings bonds?
We will provide online forms, including instructions, for
transactions.
Sec. 363.107 Does Public Debt reserve the right to require that any
transaction be conducted offline?
We reserve the right to require any transaction to be conducted
offline using an approved form. Signatures on offline transactions must
be certified or guaranteed as provided in instructions in Sec. 363.43.
Sec. Sec. 363.108-363.109 [Reserved]
Judicial and Administrative Proceedings
Sec. 363.110 Will Public Debt recognize a court order that attempts
to defeat the survivorship rights of a beneficiary, secondary owner, or
recipient of an undelivered gift bond?
We will not recognize a judicial determination that attempts to
defeat or impair the rights of survivorship of a beneficiary, secondary
owner, or recipient of an undelivered gift bond, after the death of the
owner or primary owner.
Sec. 363.111 Will Public Debt accept notice of an adverse claim or
notice of pending judicial proceedings involving book-entry Series I
savings bonds?
We are not subject to and will not accept a notice of an adverse
claim or notice of pending judicial proceedings involving book-entry
Series I savings bonds.
Sec. 363.112 Is Public Debt a proper party in a judicial proceeding
involving competing claims to a book-entry Series I savings bonds?
Treasury, Public Debt, and the Federal Reserve Banks are not proper
defendants in a judicial proceeding involving competing claims to a
book-entry Series I savings bonds.
Sec. 363.113 Will Public Debt pay or transfer book-entry Series I
savings bonds pursuant to an order in a divorce proceeding?
We will pay or transfer bonds pursuant to a divorce decree that
either disposes of savings bonds or ratifies a property settlement
agreement disposing of bonds. The owner (as defined in Sec. 363.6) of
the bonds must be a party to the proceedings. If the divorce decree
does not set out the terms of the property settlement agreement, we
will require a certified copy of the agreement.
Sec. 363.114 Will Public Debt recognize a court order?
We will recognize a final order entered by a court that affects
ownership rights in a Series I book-entry savings bonds only to the
extent that the order is consistent with the provisions of this part.
The owner (as defined in Sec. 363.6) of the bond must be a party to
the proceedings. We will require a certified copy of the court order.
Sec. 363.115 Will Public Debt pay a savings bonds pursuant to a levy?
We will pay a savings bonds pursuant to a valid levy to satisfy a
money judgment against the owner (as defined in Sec. 363.6) of the
bond. Payment will be made only to the extent necessary to satisfy the
money judgment.
Sec. 363.116 Will Public Debt pay a bond to the Internal Revenue
Service (IRS) pursuant to a levy?
We will honor an IRS administrative levy under Sec. 6331 of the
Internal Revenue Code with respect to the owner (as defined in Sec.
363.6).
Sec. 363.117 Will Public Debt pay a bond to a trustee in bankruptcy
or similar court officer?
We will pay a savings bonds to a trustee in bankruptcy, a receiver
of an insolvent's estate, a receiver in equity, or a similar court
officer, if the original court order is against the owner (as defined
in Sec. 363.6).
Sec. 363.118 What evidence is required to establish the validity of
judicial proceedings?
(a) We require certified copies of the final judgment, decree, or
court order, and any necessary supplementary proceedings.
(b) A request for payment by a trustee in bankruptcy or a receiver
of an insolvent's estate must be supported by evidence of appointment
and qualification.
(c) A request for payment by a receiver in equity or a similar
court officer (other than a receiver of an insolvent's estate), must be
supported by a copy of an order that authorizes the redemption of the
bond.
Sec. 363.119 Will Public Debt pay a bond pursuant to a forfeiture
proceeding?
(a) General. Bonds will be paid pursuant to a judicial or
administrative forfeiture made by a Federal agency. We will rely
exclusively upon the information provided by the Federal forfeiting
agency and will not make any independent evaluation of the validity of
the forfeiture order, the request for payment, or the authority of the
individual signing the request for payment. The amount paid is limited
to the redemption value of the savings bonds as of the date of
forfeiture. All inquiries or claims from the previous owner will be
referred to the forfeiting agency.
(b) Definition of special terms relating to forfeitures.
Contact point means the individual designated by the Federal
investigative
[[Page 64295]]
agency, United States Attorney's Office, or forfeiting agency, to
receive referrals from Public Debt, using Public Debt Form 1522.
Forfeiting agency means the federal law enforcement agency
responsible for the forfeiture.
Forfeiture means the process by which property may be forfeited by
a federal agency. Administrative forfeiture is forfeiture by a federal
agency without judicial proceedings; judicial forfeiture is a
forfeiture through either a civil or criminal proceeding in a United
States District Court resulting in a final judgment and order of
forfeiture.
Public Debt Form 1522 (PD 1522) is the form on which written
notification of the forfeiture is provided by the forfeiting agency to
Public Debt.
(c) Procedures for a forfeiting agency to request forfeiture of
Treasury securities. A forfeiting agency must request forfeiture on PD
1522. An individual authorized by the forfeiting agency must sign the
form. The completed PD 1522 must be mailed to the Department of the
Treasury, Bureau of the Public Debt, Parkersburg, WV 26106-1328.
(d) Public Debt procedures upon receipt of PD 1522. (1) Upon
receipt and review of the Public Debt Form 1522, we will make payment
to the forfeiture fund specified on the form. We will record the
forfeiture, the forfeiture fund into which the proceeds were paid, the
contact point, and any related information.
(2) We will rely exclusively upon the information provided by the
Federal agency and will not make any independent evaluation of the
validity of the forfeiture order, the request for payment, or the
authority of the individual signing the request for payment.
(e) Amount paid on a forfeiture. The amount we will pay on a
forfeiture is limited to the redemption value of the savings bonds as
of the date of forfeiture.
(f) Inquiries from previous owners of forfeited Treasury
securities.
(1) We will refer all inquiries from the previous owner, including
requests for payment, reissue, or applications for relief, to the
contact point.
(2) We will tell the person who inquired that we referred his or
her inquiry to the contact point.
(3) We will not investigate the inquiry.
(4) We will defer to the forfeiting agency's determination of the
appropriate course of action, including settlement where appropriate.
(5) Any settlement will be paid from the forfeiture fund into which
the proceeds were deposited.
Sec. Sec. 363.120-363.124 [Reserved]
Payment
Sec. 363.125 How is payment made on a book-entry Series I savings
bonds?
We will make payment by the ACH method to the designated account at
a United States depository financial institution.
Sec. 363.126 Under what circumstances will payment be made?
We will make payment:
(a) Upon your request for redemption prior to maturity;
(b) When the bond reaches final maturity; and
(c) If a person who becomes entitled to the bond is unable,
unwilling or ineligible to open a New Treasury Direct account.
Sec. Sec. 363.127-363.129 [Reserved]
Subparts C through E [Reserved]
Subpart F Miscellaneous
Sec. 363.175 May Public Debt waive these regulations?
We may waive or modify any provision of the regulations in this
part. We may do so in any particular case or class of cases for the
convenience of the United States or in order to relieve any person or
persons of unnecessary hardship:
(a) If the waiver would not be inconsistent with law or equity;
(b) If the waiver does not impair any material existing rights; and
(c) If we are satisfied that the waiver would not subject the
United States to any substantial expense or liability.
Sec. 363.176 Can I be required to provide additional evidence to
support a transaction?
We may require additional evidence and/or a bond of indemnity, with
or without surety, in any case where we determine it necessary to
protect the interests of the United States.
Sec. 363.177 May Public Debt amend or supplement these regulations?
We may amend, revise, or supplement these regulations at any time.
Dated: October 11, 2002.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 02-26406 Filed 10-11-02; 1:50 pm]
BILLING CODE 4810-39-P