[Federal Register Volume 68, Number 89 (Thursday, May 8, 2003)]
[Rules and Regulations]
[Pages 24794-24807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11403]



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Part II





Department of the Treasury





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Fiscal Service



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31 CFR Part 315, et al.



Regulations Governing Treasury Securities, New Treasury Direct System; 
Final Rule

  Federal Register / Vol. 68, No. 89 / Thursday, May 8, 2003 / Rules 
and Regulations  

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Parts 315, 351, 353, 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 recently implemented a new book-entry, online system for 
purchasing, holding and conducting transactions in Treasury securities. 
The system is known as New Treasury Direct.
    At its initial implementation, the only Treasury security that 
could be held in New Treasury Direct was the book-entry Series I 
savings bond. We are now adding the book-entry Series EE savings bond 
to the system. We revised the regulations governing book-entry Treasury 
securities held in the New Treasury Direct system by adding the Series 
EE savings bond to the subpart dealing with the Series I savings bond. 
This subpart now covers both Series I and Series EE book-entry savings 
bonds.
    We revised the offering of United States savings bonds of Series EE 
to provide for the book-entry Series EE savings bond. We changed the 
purchase limitation for definitive Series EE bonds from face amount to 
principal amount, for consistency with the purchase limitation for 
book-entry Series EE savings bonds, and with book-entry and definitive 
Series I bonds. We extended the original maturity period of Series EE 
savings bonds from 17 years to 20 years. We also rewrote the 
regulations in plain language.
    We revised the governing regulations for United States savings 
bonds of Series EE to make it clear that these regulations only apply 
to definitive Series EE savings bonds. We revised the governing 
regulations for Series E, H, EE, HH, and I savings bonds to streamline 
the handling of bonds belonging to a decedent's estate, and to make the 
estate provisions consistent with those for book-entry bonds.

DATES: Effective May 8, 2003.

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 recently 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.
    Upon the initial implementation of the system in October 2002, only 
book-entry Series I savings bonds were offered through New Treasury 
Direct.
    We will now offer book-entry Series EE savings bonds through the 
New Treasury Direct system.
    We will continue to offer definitive Series EE savings bonds for 
some period of time.
    The book-entry Series EE savings bond will benefit the investor by 
expanding the choices available within the New Treasury Direct system. 
The investor will be able to purchase and conduct transactions in 
Series EE savings bonds using his or her New Treasury Direct account 
using the Internet. The system will eliminate the paperwork burden 
inherent in the purchase of definitive Series EE savings bonds.
    The book-entry Series EE savings bond will benefit the government 
by providing a cost-effective and efficient processing environment, 
thereby reducing processing costs to Treasury.
    The offering circular for Series EE savings bonds is being amended 
to provide for the offering of the book-entry EE bond, and has also 
been rewritten in plain language. The offering circular is also being 
amended to change the original maturity period for both definitive and 
book-entry Series EE savings bonds from 17 years to 20 years. This 
change is being done because of the provision in the regulations that 
provides that a Series EE bond is worth its full face amount at 
original maturity. The effect of extending the original maturity period 
is to lower the minimum interest rate that is guaranteed at final 
maturity.
    Both definitive and book-entry Series EE savings bonds will earn 
interest in the same manner. Both remain accrual bonds with interest 
payable only at redemption. However, the definitive Series EE savings 
bond continues to be sold at one-half of the face amount, while the 
book-entry Series EE savings bond will be have a face amount equal to 
the amount at which it is sold.
    The limitation on purchases for the principal amount of a 
definitive Series EE savings bond is now $30,000 per calendar year, 
making it consistent with the limitation on purchases for the book-
entry Series EE bond, and both book-entry and definitive Series I 
savings bonds, which is $30,000 per calendar year, par amount. We also 
changed the manner in which the computation of the amount limitation is 
made. Previously, bonds purchased by a person as a coowner could be 
apportioned between the first and second-named coowners. This change 
requires that all bonds purchased by a person as first-named coowner be 
counted in the amount limitation, regardless of who is named as second-
named coowner. This has the effect of removing a loophole in the amount 
limitation, in which a person could purchase more than the annual 
limitation by naming several other individuals as coowners and 
apportioning the amount limitation among the other coowners.
    We revised the purchase limitation for Series I savings bonds from 
per New Treasury Direct account to per person. This change will 
eliminate the possibility of circumventing the amount limitation by 
opening more than one New Treasury Direct account, and purchasing the 
maximum amount per account.
    Registration options of the definitive and book-entry Series EE 
bond differ in many respects. The terms and conditions for the book-
entry Series EE savings bond will be similar to the terms and 
conditions of the book-entry Series I savings bond.
    Like the book-entry Series I savings bond, the forms of 
registration for book-entry Series EE 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 definitive EE 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

[[Page 24795]]

owner, has control of the bond. The primary owner may give the 
secondary owner the right to view or the right to conduct 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 identical to the registrations offered currently in definitive 
Series EE savings bonds.
    The book-entry Series EE savings bond 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 book-entry Series EE savings bond 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 transferred or delivered to the recipient, the gift bond 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 book-entry Series EE savings bonds 
is $30,000 per person per calendar year for bonds purchased by the 
account owner. Bonds purchased as gifts are included in the amount 
limitation of the recipient when delivered. Book-entry Series EE 
savings bonds may be purchased in a minimum amount of $25, with one-
cent increments above that amount per transaction. Book-entry bonds 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 EE savings bonds. However, the 
primary owner with secondary owner form of registration for book-entry 
Series EE savings bonds mandates that some issues be 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.
    We revised the governing regulations for all series of savings 
bonds and savings notes to streamline the procedures for handling 
decedents' estates. The change will provide a survivors' order of 
precedence that will permit a specified person to redeem or reissue 
savings bonds owned by a decedent on behalf of all persons entitled 
under state law, if the estate has not been administered, and if the 
redemption value of the bonds does not exceed $100,000. This change 
will provide consistency in the processing of bonds belonging to 
decedents' estates among all series of bonds and between definitive 
bonds and book-entry bonds. The previous regulations for savings bonds 
(except Series I) and savings notes provided for a similar survivors' 
order of precedence, but had a much lower amount limitation. The 
previous regulations for Series I savings bonds contained a slightly 
different version of the survivors' order of precedence.

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 315

    Banks and banking, Government securities, Federal reserve system.

31 CFR Part 351

    Bonds, Federal Reserve system, Government securities.

31 CFR Part 353

    Banks and banking, Government securities, Federal reserve system.

31 CFR Part 359

    Bonds, Federal Reserve system, Government securities, Securities.

31 CFR Part 360

    Bonds.

31 CFR Part 363

    Bonds, Electronic funds transfer, Federal Reserve system, 
Government securities, Securities.

0
Accordingly, for the reasons set out in the preamble, 31 CFR chapter 
II, subchapter B, is amended as follows:

PART 315--REGULATIONS GOVERNING U.S. SAVINGS BONDS, SERIES A, B, C, 
D, E, F, G, H, J, AND K, AND U.S. SAVINGS NOTES

0
1. The authority citation for part 315 continues to read as follows:

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

0
2. Revise Sec.  315.71 to read as follows:

Sec.  315.71  Decedent's estate.

    (a) Estate is being administered. (1) Appropriate proof of 
appointment will be required for the legal representative of the 
estate. Letters of appointment must be dated within one year of 
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 legal representative of the estate may request payment of 
bonds and held payments belonging to a decedent's estate, to the estate 
or to the person(s) entitled, or may have the bonds reissued to the 
person(s) entitled.
    (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 reissued to the 
person(s) entitled. A certified copy of the court-approved final 
accounting for the estate, the court's decree of distribution, or other 
appropriate evidence will be required.
    (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 reissued 
to the person(s) entitled. Appropriate evidence is required.
    (d) Survivors' order of precedence for payment or reissue. Estates 
with bonds over $100,000 redemption value must be administered. If 
there has been no administration, no administration is pending or 
contemplated, no summary or small estate procedures have been used, and 
the redemption value of the bonds is $100,000 or less, then bonds may 
be paid or reissued to the persons

[[Page 24796]]

named in the following order of precedence:
    (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. Reissues are not permitted.
    (9) Escheat according to the applicable state law.
    (e) When we make payments or reissues according to paragraph (d) of 
this section, we will make the payments to either a person 
individually, or individually and on behalf of all other persons 
entitled. A person who receives payment of bond proceeds individually 
and on behalf of others warrants that he or she will make distribution 
of the proceeds to the persons entitled by the law of the decedent's 
domicile. The provisions of this section are for the convenience of the 
United States and do not determine ownership of the bonds or their 
proceeds. The Department of the Treasury may rely on information 
provided by the person who requests payment or transfer, and is not 
liable for any action taken in reliance on the information furnished.


Sec.  315.72  [Reserved]

0
3. Remove and reserve Sec.  315.72.

PART 351--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE

0
4. Revise part 351 to read as follows:

PART 351--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE

Sec.
Subpart A--General Information
351.0 What does this part cover?
351.1 What regulations govern Series EE savings bonds?
351.2 How do I contact Public Debt?
351.3 What special terms do I need to know to understand this part?
351.4 In what form are Series EE savings bonds issued?
Subpart B--Maturities, Redemption Values, and Investment Yields of 
Series EE Savings Bonds

General Provisions

351.5 What is the maturity period of a Series EE savings bond?
351.6 When may I redeem my Series EE savings bond?
351.7 May Series EE savings bonds be called for redemption prior to 
final maturity?
351.8 When is interest payable on Series EE savings bonds?
351.9 When will I receive the redemption value of my Series EE 
savings bonds?
351.10 What do I need to know about market yields, or market bid 
yields, to understand redemption value calculations in this subpart?
351.11 What do I need to know about the short-term savings bond 
rate, to understand redemption value calculations in this subpart?
351.12 What do I need to know about the long-term savings bond rate, 
to understand redemption value calculations in this subpart?
351.13 What do I need to know about the savings bond rate to 
understand redemption value calculations in this subpart?
351.14 When are rate announcements applicable to Series EE savings 
bonds announced?
351.15 Is the determination of the Secretary on rates and values 
final?
351.16 What do I need to know about the base denomination for 
redemption value calculations?
351.17-351.18 [Reserved]

Series EE Savings Bonds With Issue Dates Prior to May 1, 1995

351.19 What are maturity periods of Series EE savings bonds with 
issue dates prior to May 1, 1995?
351.20 What is the investment yield (interest) during the original 
maturity period of Series EE savings bonds with issue dates January 
1, 1980, through April 1, 1995?
351.21 How are redemption values determined during any extended 
maturity period of Series EE savings bonds with issue dates prior to 
May 1, 1995?
351.22 When does the redemption value increase for bonds issued 
prior to May 1, 1995?
351.23 Are tables of redemption values available for bonds issued 
prior to May 1, 1995?

Series EE Savings Bonds With Issue Dates From May 1, 1995, Through 
April 1, 1997

351.24 What are the maturity periods of bonds with issue dates from 
May 1, 1995, through April 1, 1997?
351.25 What were the interest rates and redemption values for bonds 
with issue dates from May 1, 1995, through April 1, 1997, during 
semiannual rate periods in the first 5 years after issue date?
351.26 What are the interest rates and redemption values for bonds 
with issue dates from May 1, 1995 through April 1, 1997, during 
semiannual rate periods that begin 5 years or more after issue date?
351.27 What are the interest rates and redemption values for bonds 
with issue dates from May 1, 1995 through April 1, 1997, during an 
extended maturity period?
351.28 How are redemption values calculated for bonds with issue 
dates from May 1, 1995, through April 1, 1997?

Series EE Savings Bonds With Issue Dates From May 1, 1997, and 
Thereafter

351.29 What are the maturity periods of bonds with issue dates from 
May 1, 1997, and thereafter?
351.30 What are interest rates and monthly accruals for bonds with 
issue dates of May 1, 1997, or thereafter, during the original 
maturity period?
351.31 What is the interest penalty for Series EE bonds with issue 
dates of May 1, 1997, or thereafter that are redeemed less than 5 
years after the issue date?
351.32 How are redemption values calculated for Series EE bonds with 
issue dates of May 1, 1997, or thereafter?
351.33 What are interest rates and redemption values for bonds 
issued May

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1, 1997, or thereafter, during an extended maturity period?
351.34-351.39 [Reserved]
Subpart C--Definitive Series EE Savings Bonds
351.40 What are the denominations and prices of definitive Series EE 
savings bonds?
351.41 When are definitive Series EE savings bonds validly issued?
351.42 What is the issue date of a definitive Series EE savings 
bond?
351.43 Are taxpayer identification numbers (TINs) required for the 
registration of definitive Series EE savings bonds?
351.44 What amount of definitive Series EE savings bonds may I 
purchase per year?
351.45 What happens if I purchase definitive Series EE savings bonds 
in excess of the maximum annual amount?
351.46 May I purchase definitive Series EE savings bonds over-the-
counter?
351.47 May I purchase definitive Series EE savings bonds through a 
payroll savings plan?
351.48 May I purchase definitive Series EE savings bonds through 
employee thrift, savings, vacation, and similar plans?
351.49 How are definitive Series EE savings bonds delivered?
351.50 How is payment made when definitive Series EE savings bonds 
are redeemed?
351.51 How can I find out what my definitive Series EE savings bonds 
are worth?
351.52-351.59 [Reserved]
Subpart D Book--Entry Series EE Savings Bonds
351.60 How are book-entry Series EE savings bonds purchased and 
held?
351.61 What are the denominations and prices of book-entry Series EE 
savings bonds?
351.62 How is payment made for purchases of book-entry Series EE 
savings bonds?
351.63 How are redemption payments made for my redeemed book-entry 
Series EE savings bonds?
351.64 What is the issue date of a book-entry Series EE savings 
bond?
351.65 What amount of book-entry Series EE savings bonds may I 
acquire per year?
351.66 What book-entry Series EE savings bonds are included in the 
computation?
351.67 What happens if any person purchases book-entry Series EE 
savings bonds in excess of the maximum annual amount?
351.68 Are taxpayer identification numbers (TINs) required for 
registration of book-entry Series EE savings bonds?
351.69 When is a book-entry Series EE savings bond validly issued?
351.70 How are redemption values calculated for book-entry Series EE 
savings bonds?
351.71 How can I find out what my book-entry Series EE savings bonds 
are worth?
351.72-351.80 [Reserved]
Subpart E--Miscellaneous Provisions
351.81 Is the Education Savings Bond Program available for Series EE 
savings bonds?
351.82 Does Public Debt prohibit the issuance of Series EE savings 
bonds in a chain letter scheme?
351.83 May Public Debt issue Series EE savings bonds only in book-
entry form?
351.84 Does Public Debt make any reservations as to issue of Series 
EE savings bonds?
351.85 May Public Debt waive any provision in this part?
351.86 What is the role of Federal Reserve Banks and Branches?
351.87 May Public Debt revise, supplement or amend the terms of this 
offering?
Appendix to Part 351--Tax Considerations

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.

Subpart A--General Information


Sec.  351.0  What does this part cover?

    This part is the offering of United States Savings Bonds of Series 
EE (referred to as Series EE bonds or bonds) for sale to the people of 
the United States by the Secretary of the Treasury (Secretary). Series 
EE bonds have been offered since 1980. The current offer was effective 
May 1, 2003, and will continue until terminated by the Secretary.


Sec.  351.1  What regulations govern Series EE savings bonds?

    (a) The regulations in 31 CFR part 353 apply to definitive (paper) 
Series EE savings bonds.
    (b) The regulations in 31 CFR part 363 apply to book-entry Series 
EE savings bonds.
    (c) The regulations in 31 CFR part 370 apply to transactions for 
the purchase of savings bonds issued through the Bureau of the Public 
Debt, but do not apply to transactions purchased through issuing agents 
generally.
    (d) We expressly disclaim any representations or warranties 
regarding Series EE savings bonds that in any way conflict with these 
regulations and other applicable law.


Sec.  351.2  How do I contact Public Debt?

    You may contact Public Debt by e-mail at 
<[email protected], or by writing to the following 
address: Bureau of the Public Debt, Parkersburg, West Virginia 26106-
1328. Our website address is <www.savingsbonds.gov.


Sec.  351.3  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 EE 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 EE savings bond maintained by 
Treasury solely as a computer record.
    Coowner means either the first or the second individual named in 
the registration of a definitive Series EE savings bond registered 
``John Doe SSN 123-45-6789 or Joseph Doe.'' In this example, John Doe 
and Joseph Doe are coowners.
    Definitive bond means a Series EE savings bond issued in paper 
form.
    Extended maturity period, second extended maturity period, and 
extended maturity refer to periods after the original maturity dates of 
the bonds during which owners may retain them and continue to earn 
interest.
    Face amount refers to the nominal amount of a Series EE savings 
bond. The face amount of a definitive Series EE bond is imprinted on 
the front of the bond. The face amount of a book-entry Series EE bond 
is the amount of the original investment. (See principal amount.)
    Fiduciary means the court-appointed or otherwise qualified person, 
regardless of title, who is legally authorized to act for another. 
Fiduciary does not include an attorney-in-fact.
    Final maturity refers to the date that a bond ceases to earn 
interest.
    Individual means a natural person. Individual does not mean an 
organization, representative, or fiduciary.
    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 
31 CFR

[[Page 24798]]

part 317, and any other entity that is otherwise authorized to issue 
bonds.
    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.
    Original maturity period or original maturity refers to the initial 
maturity period of a bond prior to any extensions of maturity; this 
period varies from 8 to 20 years, depending on the issue date of the 
bond.
    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 face amount of a Series EE savings bond.
    Paying agent means a financial institution that has been qualified 
under 31 CFR 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 EE savings bond 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 bond 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 EE savings bond refers to the 
payment of principal and accrued interest when the owner presents the 
bond for payment.
    Redemption value means principal plus accrued interest of a Series 
EE savings bond, as of the date of potential or actual redemption. In 
the case of a book-entry Series EE savings bond, 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 potential or actual redemption.
    Registration of a book-entry Series EE savings bond 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 EE savings bond means that the 
name and TIN of the owner, first-named coowner, or purchaser of a gift 
bond are imprinted 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 rate periods or semiannual earnings periods are the six-
month periods beginning on the issue date and on each semiannual 
anniversary of the issue date to final maturity.
    Series EE savings bond is an accrual-type savings bond, offered at 
a discount, either in definitive (paper) form or in book-entry form, 
that pays interest on the principal based on rates determined by 
Treasury.
    Single owner means the person named in the registration of a 
savings bond 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; for example, 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 EE savings bond.


Sec.  351.4  In what form are Series EE savings bonds issued?

    Series EE savings bonds are issued in either book-entry or 
definitive form.

Subpart B--Maturities, Redemption Values, and Investment Yields of 
Series EE Savings Bonds

General Provisions


Sec.  351.5  What is the maturity period of a Series EE savings bond?

    Series EE savings bonds have a total maturity period of 30 years 
from the issue date, consisting of an original maturity period and one 
or two periods of extended maturity, which vary depending on the issue 
date of the bond. The interest on an outstanding bond ceases to accrue 
30 years after its issue date.


Sec.  351.6  When may I redeem my Series EE savings bond?

    (a) Bonds with issue dates on or before January 1, 2003. You may 
redeem your Series EE savings bond at any time beginning six months 
after its issue date.
    (b) Bonds with issue dates on or after February 1, 2003. You may 
redeem your Series EE savings bond at any time beginning twelve months 
after its issue date.


Sec.  351.7  May Series EE savings bonds be called for redemption prior 
to final maturity?

    The Secretary of the Treasury may not call Series EE bonds for 
redemption prior to final maturity.


Sec.  351.8  When is interest payable on Series EE savings bonds?

    Interest on a bond accrues and becomes part of the redemption 
value. Interest earnings are payable upon redemption.


Sec.  351.9  When will I receive the redemption value of my Series EE 
savings bonds?

    (a) You will be paid the redemption value of your definitive bond 
when you surrender the bond for payment as provided in these 
regulations and in 31 CFR part 353.
    (b) You will be paid the redemption value of your book-entry bond 
when it reaches final maturity, if you have not redeemed the bond 
previously.


Sec.  351.10  What do I need to know about market yields, or market bid 
yields, to understand redemption value calculations in this subpart?

    We use market yields, or market bid yields, derived from Treasury 
bills, notes, and bonds, to create a yield curve based on the most 
actively traded Treasury securities. This curve relates the yield on a 
security to its time to maturity. Yields at particular points on the 
curve are referred to as ``constant maturity yields'' and are 
determined by the Treasury from this daily yield curve. Six-month and 
5-year Treasury securities rates are derived from these yield curves.


Sec.  351.11  What do I need to know about the short-term savings bond 
rate, to understand redemption value calculations in this subpart?

    We determine this rate by compiling 6-month Treasury securities 
rates as of

[[Page 24799]]

the close of business for each day of the previous three months and 
calculating the monthly average for each month, rounding each monthly 
average to the nearest one-hundredth of one percent. We then determine 
the short-term savings bond rate by taking 85 percent of the three-
month average and rounding the result to the nearest one-hundredth of 
one percent. For bonds entitled to interest accruals at the short-term 
savings bond rate, that rate applies to the bond's first full 
semiannual interest accrual period following each announcement of the 
rate.


Sec.  351.12  What do I need to know about the long-term savings bond 
rate, to understand redemption value calculations in this subpart?

    We determine this rate by compiling 5-year Treasury securities 
rates as of the close of business for each day of the previous six 
months and calculating the monthly average for each month, rounding 
each monthly average to the nearest one-hundredth of one percent. We 
then determine the long-term savings bond rate by taking 85 percent of 
the 6-month average and rounding the result to the nearest one-
hundredth of one percent. For bonds entitled to interest accruals at 
the long-term savings bond rate, that rate applies to the bond's first 
full semiannual interest accrual period following each announcement of 
the rate.


Sec.  351.13  What do I need to know about the savings bond rate to 
understand redemption value calculations in this subpart?

    We determine the savings bond rate by compiling 5-year Treasury 
securities yields as of the close of business for each day of the 
previous six months and calculating the monthly average to the nearest 
one-hundredth of one percent. We then determine the savings bonds rate 
by taking 90 percent of the 6-month average and rounding the result to 
the nearest one-hundredth of one percent.


Sec.  351.14  When are rate announcements that apply to Series EE 
savings bonds announced?

    (a) The Secretary will furnish rates that apply to Series EE 
savings bonds in announcements published each May 1 and November 1.
    (b) If the regularly scheduled date for the announcement is a day 
when we are not open for business, then the Secretary will make the 
announcement on the next business day. However, the effective date of 
the rate remains the first day of the month of the announcement.
    (c) The Secretary may announce rates at any other time.


Sec.  351.15  Is the determination of the Secretary on rates and values 
final?

    The Secretary's determination of rates of return and savings bond 
redemption values is final and conclusive.


Sec.  351.16  What do I need to know about the base denomination for 
redemption value calculations?

    We base all calculations of interest on a unit with a principal 
amount of $12.50. We use this unit value to determine the value of 
bonds in higher denominations. The effect of rounding off the value of 
the $12.50 unit increases at higher denominations. This can work to 
your slight advantage or disadvantage, depending on whether the value 
is rounded up or down.

    Example. The following hypothetical example illustrates the 
calculation: A rate of 3.25% will result in a newly purchased $12.50 
unit increasing in value after six months to $12.70, when rounded to 
the nearest cent. Therefore, a $5,000 definitive Series EE bond 
(with a principal amount of $2,500) will be worth $2,540 after six 
months ([$2,500 divided by $12.50] x $12.70 = $2,540.) In contrast, 
if applied directly to a $2,500 principal amount, the rate would 
render a value of $2,540.63 after six months, a difference of 63 
cents. (This example does not account for any interest penalty that 
might apply if you redeem a bond less than five years after its 
issue date.)


Sec. Sec.  351.17-351.18  [Reserved]

Series EE Savings Bonds with Issue Dates Prior to May 1, 1995


Sec.  351.19  What are maturity periods of Series EE savings bonds with 
issue dates prior to May 1, 1995?

    Bonds with issue dates from January 1, 1980, through May 1, 1995 
have an original maturity period and two extended maturity periods, as 
shown by the following table:

----------------------------------------------------------------------------------------------------------------
                                                First extended      Second
    Issue dates--1st day of      Original term     term (in      extended term        Final maturity dates
                                  (in years)        years)        (in years)
----------------------------------------------------------------------------------------------------------------
Jan. 1980-Oct. 1980...........              11              10               9  Jan. 2010-Oct. 2010.
Nov. 1980-Apr. 1981...........               9              10              11  Nov. 2010-Apr. 2011.
May 1981-Oct. 1982............               8              10              12  May 2011-Oct. 2012.
Nov. 1982-Oct. 1986...........              10              10              10  Nov. 2012-Oct. 2016.
Nov. 1986-Feb. 1993...........              12              10               8  Nov. 2016-Feb. 2023.
Mar. 1993-Apr. 1995...........              18              10               2  Mar. 2023-Apr. 2025.
----------------------------------------------------------------------------------------------------------------

Sec.  351.20  What is the investment yield (interest) during the 
original maturity period of Series EE savings bonds with issue dates 
from January 1, 1980, through April 1, 1995?

    The redemption value of a bond on a given interest accrual date 
during original maturity will be the higher of the value produced using 
the applicable guaranteed minimum investment yield or the value 
produced using the appropriate market-based variable investment yield.
    (a) Guaranteed minimum investment yield. (1) Bonds bearing issue 
dates prior to November 1, 1982. You may obtain the guaranteed minimum 
investment yields on bonds bearing issue dates prior to November 1, 
1982, by downloading from our website at 
<www.savingsbonds.gov, contacting us by email at 
<[email protected], or by writing us at the following 
address: Bureau of the Public Debt, Parkersburg, West Virginia 26106-
1328.
    (2) Bonds bearing issue dates of November 1, 1982, through April 1, 
1995. (i) Prior to 5 years from issue date. You may download the 
guaranteed minimum investment yields prior to 5 years from issue date 
at our website at <www.savingsbonds.gov, by contacting us by 
email at <[email protected], or writing to the 
following address: Bureau of the Public Debt, Parkersburg, West 
Virginia 26106-1328.
    (ii) On or after 5 years from issue date. The guaranteed minimum 
investment yield of a bond from its issue date to each semiannual 
interest accrual date occurring on or after 5 years from issue up to 
original maturity will be as follows, compounded semiannually:

[[Page 24800]]



------------------------------------------------------------------------
                    Issue dates of bonds                        Percent
------------------------------------------------------------------------
Nov. 1, 1982-October 1, 1986................................         7.5
Nov. 1, 1986-Feb. 1, 1993...................................         6
Mar. 1, 1993-Apr. 1, 1995...................................         4
------------------------------------------------------------------------

    (b) Market-based variable investment yield. If a bond is held for a 
period of 5 years after its first semiannual interest accrual period, 
occurring on or after November 1, 1982, or its issue date, whichever is 
later, its market-based variable investment yield for such period, and 
to each successive semiannual interest accrual date up to its original 
maturity, will be determined as follows:
    (1) For each 6-month period, starting with the period beginning on 
May 1, 1982, we will determine the average market yield on outstanding 
marketable Treasury securities with a remaining term to maturity of 
approximately 5 years during such period.
    (2) For bonds bearing an issue date prior to May 1, 1989, the 
market-based variable investment yield from its first semiannual 
interest accrual date occurring on or after November 1, 1982, or its 
issue date, whichever is later, to its first semiannual interest 
accrual date 5 years thereafter will be 85 percent, rounded to the 
nearest one-fourth of 1 percent, of the arithmetic average of the 
market yield averages for the ten 6-month periods starting with the 6-
month period that most recently ended before such issue date, whichever 
is later.
    (3) For bonds bearing issue dates of May 1, 1989, through April 1, 
1995, the market-based variable investment yield from the issue date to 
the semiannual interest accrual date 5 years thereafter will be 85 
percent, rounded to the nearest one-hundredth of 1 percent, of the 
arithmetic average of the market yield averages for the ten 6-month 
periods starting with the 6-month period that most recently ended 
before such issue date.
    (4) In determining the market-based variable investment yield for a 
bond from its first semiannual interest accrual date occurring on or 
after November 1, 1982, or its issue date, whichever is later, to each 
successive semiannual interest accrual date occurring after 5 years 
from issue up to original maturity, the average market yield for each 
additional 6-month period will be included in the computation.


Sec.  351.21  How are redemption values determined during any extended 
maturity period of Series EE savings bonds with issue dates prior to 
May 1, 1995?

    The redemption value of a bond on a given interest accrual date 
during an extended maturity period or periods will be the higher of the 
values produced using either the applicable guaranteed minimum 
investment yield or the appropriate market-based variable investment 
yield. The calculation of these yields and the resulting redemption 
values are described below:
    (a) Guaranteed minimum investment yield and resulting values during 
an extended maturity period. A bond may be subject to one guaranteed 
minimum investment yield during its original maturity period and to 
another such yield during each of its extended maturity periods.
    (1) Bonds entering an extended maturity period from May 1, 1989, 
through February 1, 1993. Bonds that entered an extended maturity 
period from May 1, 1989, through February 1, 1993, had a guaranteed 
minimum investment yield of 6 percent per annum, compounded 
semiannually, during that extended maturity period.
    (2) Bonds entering an extended maturity period on or after March 1, 
1993. Bonds that entered or enter an extended maturity period on or 
after March 1, 1993, have a guaranteed minimum investment yield of 4 
percent per annum, compounded semiannually, during that extended 
maturity period, or the guaranteed minimum investment yield in effect 
at the beginning of that period.
    (3) Determination of values for a bond during extended maturity 
periods. In order to determine values for a bond during its first 
extended maturity period, we determine the value of the bond at the end 
of its original maturity period using the guaranteed minimum investment 
yield applicable to that period. This value is then used as the base 
upon which interest accrues during the first extended maturity period 
at the applicable guaranteed minimum investment yield for that period. 
We use the value thus attained at first extended maturity as the base 
upon which interest accrues during the second extended maturity period 
at the applicable guaranteed minimum investment yield for that period. 
We then compare the resulting semiannual values with the corresponding 
values determined using only the applicable market-based variable 
investment yields.
    (b) Market-based variable investment yield and resulting values 
during an extended maturity period. For a bond beginning an extended 
maturity period, the market-based variable investment yield from its 
first semiannual interest accrual date occurring on or after November 
1, 1982, or its issue date, whichever is later, to each semiannual 
interest accrual date occurring on or after November 1, 1989, will be 
85 percent, rounded to the nearest one-hundredth of one percent, of the 
arithmetic average of the market yield averages for the appropriate 
number of 6-month periods involved, beginning with the period from May 
1, 1982, or the 6-month period that most recently ended before the 
issue date, whichever period occurs later. We use the value of a bond 
on its first semiannual interest accrual date occurring on or after 
November 1, 1982, or its issue date, whichever is later, as the base 
upon which interest accrues during the extended maturity period at the 
applicable market-based variable investment yield. As described above, 
the bond will receive the higher of the two values: One value produced 
using the applicable market-based variable investment yield; and, the 
other value produced using the guaranteed minimum investment yield.


Sec.  351.22  When does the redemption value increase for bonds issued 
prior to May 1, 1995?

    (a) Bonds with issue dates from January 1, 1980, through October 1, 
1980. For bonds with issue dates from January 1, 1980, through October 
1, 1980, the redemption value increases on the first day of each month 
from the third through the thirtieth month after issue, and thereafter 
on the first day of each successive 6-month period.
    (b) Bonds with issue dates from November 1, 1980, through October 
1, 1986. For bonds with issue dates from November 1, 1980, through 
October 1, 1986, the redemption value increases on the first day of 
each month from the third through the eighteenth month after issue, and 
thereafter on the first day of each successive 6-month period.
    (c) Bonds with issue dates from November 1, 1986, through February 
1, 1993. For bonds with issue dates from November 1, 1986, through 
February 1, 1993, the redemption values increase on the first day of 
each month from the third through the thirtieth month after issue, and 
thereafter on the first day of each successive 6-month period.
    (d) Bonds with issue dates of March 1, 1993, through April 1, 1995. 
For bonds with issue dates of March 1, 1993, through April 1, 1995, the 
redemption values increase on the first day of each month from the 
third through the sixtieth month after issue, and thereafter either on 
the first day of each month or on the first day of each successive 6-
month period, whichever accrual schedule ensures that the actual yield 
from issue date to redemption date

[[Page 24801]]

is in no case less than 4 percent per annum, compounded semiannually.


Sec.  351.23  Are tables of redemption values available for bonds 
issued prior to May 1, 1995?

    You may obtain the appropriate yields and tables by downloading 
from our website at <www.savingsbonds.gov, contacting us by 
email at <[email protected], or by writing us at the 
following address: Bureau of the Public Debt, Parkersburg, West 
Virginia 26106-1328.

Series EE Savings Bonds With Issue Dates From May 1, 1995, Through 
April 1, 1997


Sec.  351.24  What are the maturity periods of bonds with issue dates 
from May 1, 1995, through April 1, 1997?

    (a) Original maturity. Bonds reach original maturity at 17 years 
after issue date.
    (b) Final maturity. Series EE savings bonds have an extended 
maturity period of 13 years, and reach final maturity at 30 years after 
the issue date. Bonds cease to earn interest at final maturity.


Sec.  351.25  What were the interest rates and redemption values for 
bonds with issue dates from May 1, 1995, through April 1, 1997, during 
semiannual rate periods in the first 5 years after issue date?

    (a) Interest rates. The interest rate for a Series EE bond bearing 
an issue date of May 1, 1995, through April 1, 1997, for semiannual 
earning periods during the first 5 years from issue date, was the 
short-term savings bond rate (see Sec.  351.11 for a description of the 
short-term savings bond rate.)
    (b) Redemption values. Redemption values for semiannual accrual 
dates occurring on or before 5 years from issue date are calculated in 
accordance with Sec.  351.28.


Sec.  351.26  What are the interest rates and redemption values for 
bonds with issue dates from May 1, 1995 through April 1, 1997, during 
semiannual rate periods that begin 5 years or more after issue date?

    (a) Interest rates. The interest rate for a Series EE bond bearing 
an issue date of May 1, 1995, through April 1, 1997, for semiannual 
earning periods beginning 5 years from issue date through original 
maturity, is the long-term savings bond rate as defined in Sec.  
351.12.
    (b) Redemption values. We calculate redemption values for 
semiannual accrual dates occurring after 5 years from issue date, 
through original maturity, in accordance with Sec.  351.28, except that 
the redemption value at the date of original maturity shall not be less 
than the denomination (face amount or face value).


Sec.  351.27  What are the interest rates and redemption values for 
bonds with issue dates from May 1, 1995, through April 1, 1997, during 
an extended maturity period?

    During an extended maturity period the bond will be subject to the 
terms and conditions in effect when it is issued, and will continue to 
earn interest as described in paragraph Sec.  351.26, unless the terms 
and conditions applicable to an extended maturity period are expressly 
amended prior to the beginning of such period.


Sec.  351.28  How are redemption values calculated for bonds with issue 
dates from May 1, 1995, through April 1, 1997?

    We determine the redemption value of a bond on the accrual date 
immediately following each semiannual earning period as follows:
    (a) We convert the applicable long-term or short-term savings bond 
rate for the semiannual earning period to decimal form by dividing by 
100, and adjust it to a semiannual rate by dividing by 2.
    (b) Using redemption values for the base denomination, as defined 
in Sec.  351.16, we then multiply this rate by the redemption value of 
the bond at the beginning of the semiannual earning period.
    (c) We add the resulting interest amount, rounded to the nearest 
cent, to the redemption value of the bond at the beginning of the 
earning period to produce the redemption value at the next semiannual 
accrual date. The redemption value of a bond remains constant between 
accrual dates.

Series EE Savings Bonds With Issue Dates From May 1, 1997, and 
Thereafter


Sec.  351.29  What are the maturity periods of bonds with issue dates 
from May 1, 1997, and thereafter?

    (a) Original maturity. (1) Bonds with issue dates from May 1, 1997, 
to May 1, 2003. Bonds reach original maturity at 17 years after issue 
date.
    (2) Bonds with issue dates from June 1, 2003, and thereafter. Bonds 
reach original maturity at 20 years after issue date.
    (b) Final maturity. Bonds reach final maturity at 30 years after 
the issue date. Bonds cease to earn interest at final maturity.


Sec.  351.30  What are interest rates and monthly accruals for bonds 
with issue dates of May 1, 1997, or thereafter, during the original 
maturity period?

    Savings bond rates (defined in Sec.  351.13) apply to earnings 
during the first semiannual rate period beginning on or after the 
effective date of the rate. Interest is credited on the first day of 
each month and compounded semiannually. Interest accrues beginning with 
the fourth month from the issue date. For example, a bond issued in 
January has interest first credited on May 1, which represents one 
month of interest because of the 3-month interest penalty. The 
following table shows, for any given month of issue with rates 
announced each May and November, the months making up the semiannual 
rate period during which interest is earned at the announced rate 
(disregarding the penalty for bonds redeemed prior to 5 years after the 
issue date) and the months in which the bonds increase in value. This 
rate is an annual rate compounded semiannually.

----------------------------------------------------------------------------------------------------------------
                                                             Then, semiannual
                                    And rate announcement/    rate periods in
        If issue month is--          effective date is--     which interest is    And bonds increase in value on
                                                              earned include          1st day of months of--
                                                                months of--
----------------------------------------------------------------------------------------------------------------
Jan. or Jul.......................  May 1................  Jul. through Dec....  Aug. through Jan.
Feb. or Aug.......................  May 1................  Aug. through Jan....  Sep. through Feb.
Mar. or Sep.......................  May 1................  Sep. through Feb....  Oct. through Mar.
Apr. or Oct.......................  May 1................  Oct. through Mar....  Nov. through Apr.
May or Nov........................  May 1................  May through Oct.....  Jun. through Nov.
Jun. or Dec.......................  May 1................  Jun. through Nov....  Jul. through Dec.
Jan. or Jul.......................  Nov. 1...............  Jan. through Jun....  Feb. through Jul.
Feb. or Aug.......................  Nov. 1...............  Feb. through Jul....  Mar. through Aug.
Mar. or Sep.......................  Nov. 1...............  Mar. through Aug....  Apr. through Sep.
Apr. or Oct.......................  Nov. 1...............  Apr. through Sep....  May through Oct.
May or Nov........................  Nov. 1...............  Nov. through Apr....  Dec. through May.

[[Page 24802]]

 
Jun. or Dec.......................  Nov. 1...............  Dec. through May....  Jan. through Jun.
----------------------------------------------------------------------------------------------------------------

Sec.  351.31  What is the interest penalty for Series EE bonds with 
issue dates of May 1, 1997, or thereafter, that are redeemed less than 
5 years after the issue date?

    If you redeem a Series EE savings bond with an issue date of May 1, 
1997, or thereafter, less than five years following the issue date, we 
reduce the overall earning period from the issue date by three months. 
For example, if you redeem a bond issued January 1, 1998, 9 months 
later on October 1, 1998, we will determine the redemption value by 
applying the redemption value calculation formula described in Sec.  
351.32 and the savings bonds rate for that bond at 6 months after the 
issue date on July 1, 1998. The redemption value of a bond subject to 
the 3-month interest penalty shall not be reduced below the issue 
price. This penalty does not apply to bonds redeemed 5 years or more 
after the issue date.


Sec.  351.32  How are redemption values calculated for Series EE bonds 
with issue dates of May 1, 1997, or thereafter?

    (a) Formula for redemption value. We determine the redemption value 
of a bond for the accrual date (the first day of each month beginning 
with the fourth month from the issue date) in accordance with this 
section and the following formula:

FV = PV x {[1+(i / 2)] (m/6){time} 


where

FV (future value) = redemption value on redemption date rounded to the 
nearest cent.
PV (present value) = redemption value at the beginning of the 
semiannual rate period
i = savings bonds rate converted to decimal form by dividing by 100.
m = number of full calendar months outstanding during the semiannual 
rate period.\1\

    \1\ The following hypothetical example illustrates how this 
formula is applied:
    Example, assume a hypothetical savings bonds rate of 5.00% 
effective May 1, 2002, for a bond denominated at $25, with an issue 
date of September 1, 1997 and a redemption value of $16.00 as of 
September 1, 2002. The February 1, 2003, 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 effective date 
of the May 1, 2002, rate would be the period beginning September 1, 
2002. PV, the present value, would be the value of the bond at the 
beginning of the semiannual rate period, on September 1, 2002. The 
savings bonds rate of 5.00% converted to a decimal would be 0.05. 
The number of months, m, is 5 since 5 full calendar months 
(September through January) have lapsed since the beginning of the 
rate period. FV is then the result of the formula:
    FV = $16.00 x { [1 + (0.05 / 2)] (5/6){time}  = 
$16.33 after rounding to the nearest cent.
    Using the example, the FV of a savings bond with a $50 or larger 
denomination can be determined by applying the appropriate multiple, 
for example: $16.33 x ($50.00/$25.00) for a bond with a $50.00 face 
amount; or $16.33 x ($100.00/$25.00) for a bond with a $100.00 face 
amount.
---------------------------------------------------------------------------

    (b) Value of bonds at original maturity. (1) Definitive bond. At 
original maturity, the redemption value of a definitive bond shall not 
be less than the face amount/denomination of the bond.
    (2) Book-entry bond. At original maturity, the redemption value of 
a book-entry bond shall not be less than double the purchase price of 
the bond.


Sec.  351.33  What are interest rates and redemption values for bonds 
issued May 1, 1997, or thereafter, during an extended maturity period?

    During an extended maturity period the bond will be subject to the 
terms and conditions in effect when it is issued and will continue to 
earn interest as described in Sec.  351.30, unless the terms and 
conditions applicable to an extended maturity period are expressly 
amended prior to the beginning of such period.


Sec.  351.34-351.39  [Reserved]

Subpart C--Definitive Series EE Savings Bonds


Sec.  351.40  What are the denominations and prices of definitive 
Series EE savings bonds?

    We issue definitive bonds in denominations of $50, $75, $100, $200, 
$500, $1,000, $5,000, and $10,000. The purchase price is one-half the 
amount of the denomination.


Sec.  351.41  When are definitive Series EE savings bonds validly 
issued?

    A definitive bond is validly issued when it is registered as 
provided in 31 CFR part 353, and when it bears an issue date and the 
validation indicia of an authorized issuing agent.


Sec.  351.42  What is the issue date of a definitive Series EE savings 
bond?

    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.  351.43  Are taxpayer identification numbers (TINs) required for 
the registration of definitive Series EE savings bonds?

    The inscription of a definitive bond must include the TIN of the 
owner or first-named coowner. The TIN of the second-named coowner or 
beneficiary is not required but its inclusion is desirable. 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.  351.44  What amount of definitive Series EE savings bonds may I 
purchase per year?

    The principal amount of definitive bonds that you may purchase in 
any calendar year is limited to $30,000. See 31 CFR 353.10 and 353.11 
of this Chapter for rules governing the computation of amounts and the 
special limitation for employee plans.


Sec.  351.45  What happens if I purchase definitive Series EE savings 
bonds in excess of the maximum annual amount?

    If you have bonds issued during any one calendar year in excess of 
the prescribed maximum annual 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 us at the following 
address: email at <[email protected], or writing to 
Bureau of the Public Debt, Parkersburg, WV 26106-1328, or.


Sec.  351.46  May I purchase definitive Series EE savings bonds over-
the-counter?

    You may purchase definitive bonds over-the-counter through any 
issuing agent qualified under 31 CFR part 317.\2\ 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.
---------------------------------------------------------------------------

    \2\ 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.

---------------------------------------------------------------------------

[[Page 24803]]

Sec.  351.47  May I purchase definitive Series EE savings bonds through 
a payroll savings plan?

    You may purchase definitive bonds in denominations of $100 or 
higher through deductions from your pay if your employer maintains a 
payroll savings plan. An authorized issuing agent must issue the bonds.


Sec.  351.48  May I purchase definitive Series EE savings bonds through 
employee thrift, savings, vacation, and similar plans?

    You may purchase bonds registered in the names of trustees of 
employee plans in book-entry form in multiples of $100 through a 
designated Federal Reserve Bank, after we have approved the plan as 
eligible for the special limitation under Sec.  353.13 of this chapter.


Sec.  351.49  How are definitive Series EE 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.  351.50  How is payment made when definitive Series EE savings 
bonds are redeemed?

    (a) Payment in general. A financial institution qualified as a 
paying agent under the provisions of 31 CFR part 321 will pay the 
current redemption value of a definitive Series EE bond presented for 
payment. The bond must meet the requirements for payment specified in 
31 CFR part 353. 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.
    (b) Payment to beneficiary or legal representative. A paying agent 
may, but is not required to, pay the current redemption value of a 
definitive Series EE savings bond upon the request of a beneficiary if 
he or she survives the owner, or a legal representative designated in 
the bond registration by name and capacity, or a court-appointed legal 
representative of the last-deceased registrant's estate provided:
    (1) The bond is in order for payment; and
    (2) The presenter establishes his or her identity to the 
satisfaction of the agent in accordance with our instructions and 
identification guidelines, and signs and completes the request for 
payment.


Sec.  351.51  How can I find out what my definitive Series EE savings 
bonds are worth?

    (a) Redemption values. We make redemption values available for 
definitive bonds in various formats and media.
    (1) You may determine the redemption value for definitive bonds on 
the Internet at <http://www.savingsbonds.gov.
    (2) You may download savings bond calculators from the Internet at 
<http://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. For bonds issued after May 1, 1997, 
redemption values published in the tables reflect the three-month 
interest penalty applied to bonds redeemed prior to five years from the 
issue date.


Sec.  351.52-351.59  [Reserved]

Subpart D--Book-Entry Series EE Savings Bonds


Sec.  351.60  How are book-entry Series EE 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.  351.61  What are the denominations and prices of book-entry 
Series EE savings bonds?

    Book-entry bonds are issued in a minimum amount of $25, with 
additional increments of one cent.


Sec.  351.62  How is payment made for purchases of book-entry Series EE 
savings bonds?

    Purchases of book-entry EE 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.  351.63  How are redemption payments made for my redeemed book-
entry Series EE 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.  351.64  What is the issue date of a book-entry Series EE savings 
bond?

    The issue date of a book-entry savings bond is the first day of the 
month in which we receive ACH settlement for the bond.


Sec.  351.65  What amount of book-entry Series EE savings bonds may I 
acquire per year?

    The principal amount of book-entry bonds that you may acquire in 
any calendar year is limited to $30,000.


Sec.  351.66  What book-entry Series EE savings bonds are included in 
the computation?

    (a) We include all bonds that you purchased 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, unless the recipient has become entitled 
to the transferred bonds due to the death of the registered owner.


Sec.  351.67  What happens if any person purchases book-entry Series EE 
savings bonds in excess of the maximum annual 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.  351.68  Are taxpayer identification numbers (TINs) required for 
registration of book-entry Series EE savings bonds?

    The TIN of each person named in the registration is required to 
purchase a book-entry bond.


Sec.  351.69  When is a book-entry Series EE savings bond validly 
issued?

    A book-entry bond is validly issued when it is posted to your New 
Treasury Direct account.


Sec.  351.70  How are redemption values calculated for book-entry 
Series EE savings bonds?

    We base current redemption values (CRV) for book-entry Series EE 
savings bonds on the definitive savings bond CRV. We use the CRV for a 
$100 principal amount as calculated in Sec.  351.16 to calculate a CRV 
prorated to the book-entry principal investment amount for the 
corresponding issue and redemption dates. Calculated book-entry

[[Page 24804]]

CRV will be rounded to the nearest one cent.\3\ The formula is as 
follows:

    \3\ Example: Calculated value of $25.044 rounds to $25.04; 
calculated value of $25.045 rounds to $25.05.
---------------------------------------------------------------------------

[Book-entry principal investment / $100] x [CRV value for $100 
principal amount].


Sec.  351.71  How can I find out what my book-entry Series EE 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 for bonds that are within 5 years from issue 
date reflect the three-month interest penalty applied to bonds redeemed 
prior to five years from the issue date.


Sec.  351.72-351.80  [Reserved]

Subpart E--Miscellaneous Provisions


Sec.  351.81  Is the Education Savings Bond Program available for 
Series EE 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 
coowner (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 Bond 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 
for Higher Education.'') These publications are available on the IRS 
Web site at <http://www.irs.gov.


Sec.  351.82  Does Public Debt prohibit the issuance of Series EE 
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.  351.83  May Public Debt issue Series EE savings bonds only in 
book-entry form?

    We reserve the right to issue bonds only in book-entry form.


Sec.  351.84  Does Public Debt make any reservations as to issue of 
Series EE savings bonds?

    We may reject any application for Series EE 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.  351.85  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.  351.86  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 EE bonds.
    (b) We have currently designated the following Federal Reserve 
Offices to provide savings bond services:

------------------------------------------------------------------------
                                 Reserve district     Geographic area
        Servicing site                served               served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo   New York, Boston.  Connecticut, Maine,
 Branch, 160 Delaware Avenue,                       Massachusetts, New
 Buffalo, NY 14202.                                 Hampshire, New
                                                    Jersey (northern
                                                    half), New York,
                                                    Rhode Island,
                                                    Vermont, Puerto
                                                    Rico, Virgin
                                                    Islands.
Federal Reserve Bank,           Cleveland,         Delaware, Kentucky
 Pittsburgh Branch, 717 Grant    Philadelphia.      (eastern half), New
 Street, Pittsburgh, PA 15219.                      Jersey, (southern
                                                    half), Ohio,
                                                    Pennsylvania, West
                                                    Virginia (northern
                                                    panhandle only).
Federal Reserve Bank of         Richmond, Atlanta  Alabama, District of
 Richmond, 701 East Byrd                            Columbia, Florida,
 Street, Richmond, VA 23219.                        Georgia, Louisiana
                                                    (southern half),
                                                    Maryland,
                                                    Mississippi
                                                    (southern half),
                                                    North Carolina,
                                                    South Carolina,
                                                    Tennessee (eastern
                                                    half), Virginia,
                                                    West Virginia
                                                    (except northern
                                                    panhandle).
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,         Arkansas,
 Kansas City, MO 64106.          Kansas City, St.   California,
                                 Louis.             Colorado, Hawaii,
                                                    Idaho, Illinois
                                                    (southern half),
                                                    Indiana (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.  351.87  May Public Debt revise, supplement or amend the terms of 
this offering?

    We may revise, supplement or amend the terms of this offering at 
any time.

Appendix to Part 351--Tax Considerations

    1. What are some general tax considerations?
    General. Interest on savings bonds is subject to taxes imposed 
under the Internal Revenue Code of 1986, as amended. The bonds are 
exempt from taxation by any State or political subdivision of a 
State, except for estate or inheritance taxes. (See 31 U.S.C. 3124.)
    2. What reporting methods are available for savings bonds?
    (a) Reporting methods. You may use either of the following two 
methods for reporting

[[Page 24805]]

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 EE bonds 
that you then own, those subsequently acquired, and to any other 
obligations purchased on a discount basis.
    (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 a 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 EE savings bond may have tax 
consequences for the owner.
    (b) The transfer of a book-entry Series EE savings bond from one 
owner to another may have tax consequences for the transferor.
    (c) The redemption of a book-entry Series EE savings bond by the 
secondary owner may have tax consequences for the primary owner.
    (d) The purchase of a Series EE savings bond as a gift may have 
gift tax consequences.

PART 353--REGULATIONS GOVERNING UNITED STATES SAVINGS BONDS, SERIES 
EE AND HH

0
5. The authority citation for part 353 continues to read as follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105, 3125.


0
6. Revise Sec.  353.0 to read as follows:


Sec.  353.0  Applicability.

    (a) The regulation in this part govern definitive (paper) United 
States Savings Bonds of Series EE and Series HH. These bonds bear issue 
dates of January 1, 1980, or thereafter.
    (b) The regulations in 31 CFR part 315 govern all other definitive 
United States Savings Bonds and Savings Notes.
    (c) The regulations in 31 CFR part 363 govern Series EE savings 
bonds held in book-entry form in New Treasury Direct.

0
7. Amend Sec.  353.2 by revising paragraph (a) to read as follows:


Sec.  353.2  Definitions.

    (a) Bond, or Series EE or HH savings bond, as used in this part, 
means a definitive United States Savings Bond of Series EE or HH.
* * * * *

0
8. Amend Sec.  353.10 (a) by removing the parenthetical term ``face 
amount'' and adding in its place the parenthetical term ``principal 
amount'' in the introductory paragraph.

0
9. Amend Sec.  353.11 by revising paragraph (b)(3) to read as follows:


Sec.  353.11  Computation of amount.

* * * * *
    (b) * * *
    (3) All bonds registered in the name of that person as first-named 
coowner.
* * * * *

0
10. Revise Sec.  353.12 to read as follows:


Sec.  353.12  Disposition of excess.

    If any person at any time has savings bonds issued during any one 
calendar year in excess of the prescribed amount, the Bureau of the 
Public Debt reserves the right to take any action that it deems 
necessary to adjust the excess. Instructions for adjustment of the 
excess can be obtained by email at <[email protected] 
or by writing to Bureau of the Public Debt, Parkersburg, WV 26106-1328.

0
11. Revise Sec.  353.71 to read as follows:


Sec.  353.71  Decedent's estate

    (a) Estate is being administered. (1) Appropriate proof of 
appointment will be required for the legal representative of the 
estate. Letters of appointment must be dated within one year of 
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 legal representative of the estate may request payment of 
bonds and held payments belonging to a decedent's estate, to the estate 
or to the person(s) entitled, or may have the bonds reissued to the 
person(s) entitled.
    (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 reissued to the 
person(s) entitled. A certified copy of the court-approved final 
accounting for the estate, the court's decree of distribution, or other 
appropriate evidence will be required.
    (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 reissued 
to the person(s) entitled. Appropriate evidence is required.
    (d) Survivors' order of precedence for payment or transfer. Estates 
with bonds over $100,000 redemption value must be administered. If 
there has been no administration, no administration is pending or 
contemplated, no summary or small estate procedures have been used, and 
the redemption value of the bonds is $100,000 or less, then bonds may 
be paid or reissued to the persons named in the following order of 
precedence:
    (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

[[Page 24806]]

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 reissues according to paragraph (d) of 
this section, we will make the payments to either a person 
individually, or individually and on behalf of all other persons 
entitled. A person who receives payment of bond proceeds individually 
and on behalf of others warrants that he or she will make distribution 
of the proceeds to the persons entitled by the law of the decedent's 
domicile. The provisions of this section are for the convenience of the 
United States and do not determine ownership of the bonds or their 
proceeds. The Department of the Treasury may rely on information 
provided by the person who requests payment or transfer, and is not 
liable for any action taken in reliance on the information furnished.


Sec.  353.72  [Reserved]

0
12. Remove and reserve Sec.  353.72.

PART 359--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I

0
13. The authority citation for part 359 continues to read as follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.


0
14. Revise Sec.  359.50 to read as follows:


Sec.  359.50  What amount of book-entry Series I savings bonds may I 
acquire per year?

    The principal amount of book-entry bonds that you may acquire in 
any calendar year is limited to $30,000.

0
15. Revise Sec.  359.51 to read as follows:


Sec.  359.51  What book-entry Series I savings bonds are included in 
the computation?

    (a) We include all bonds that you purchased 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, unless you have become entitled to the 
transferred bonds due to the death of the registered owner.


Sec.  359.65  [Reserved]

0
16. Remove and reserve Sec.  359.65.

0
17. Revise Appendix D to Part 359, Section 1, to read as follows:

Appendix D to Part 359--Tax Considerations

    1. What are some general tax considerations?
    Interest on savings bonds is subject to taxes imposed under the 
Internal Revenue Code of 1986, as amended. The bonds are exempt from 
taxation by any State or political subdivision of a State, except 
for estate or inheritance taxes. (See 31 U.S.C. 3124.)
* * * * *

PART 360--REGULATIONS GOVERNING DEFINITIVE UNITED STATES SAVINGS 
BONDS, SERIES I

0
18. The authority citation for part 360 continues to read as follows:

    Authority: 5 U.S.C. 301; 31 U.S.C. 3105 and 3125.


0
19. Revise Sec.  360.71 to read as follows:


Sec.  360.71  Decedent's estate.

    (a) Estate is being administered. (1) Appropriate proof of 
appointment will be required for the legal representative of the 
estate. Letters of appointment must be dated within one year of 
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 legal representative of the estate may request payment of 
bonds and held payments belonging to a decedent's estate to the estate 
or to the person(s) entitled, or may have the bonds reissued to the 
person(s) entitled.
    (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 reissued to the 
person(s) entitled. A certified copy of the court-approved final 
accounting for the estate, the court's decree of distribution, or other 
appropriate evidence will be required.
    (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 reissued 
to the person(s) entitled. Appropriate evidence is required.
    (d) Survivors' order of precedence for payment or transfer. Estates 
with bonds over $100,000 redemption value must be administered. If 
there has been no administration, no administration is pending or 
contemplated, no summary or small estate procedures have been used, and 
the redemption value of the bonds is $100,000 or less, then bonds may 
be paid or reissued to the persons named in the following order of 
precedence:
    (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

[[Page 24807]]

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 reissues according to paragraph (d) of 
this section, we will make the payments to either a person 
individually, or individually and on behalf of all other persons 
entitled. A person who receives payment of bond proceeds individually 
and on behalf of others warrants that he or she will make distribution 
of the proceeds to the persons entitled by the law of the decedent's 
domicile. The provisions of this section are for the convenience of the 
United States and do not determine ownership of the bonds or their 
proceeds. The Department of the Treasury may rely on information 
provided by the person who requests payment or transfer, and is not 
liable for any action taken in reliance on the information furnished.


Sec.  360.72  [Reserved]

0
20. Remove and reserve Sec.  360.72.

PART 363--REGULATIONS GOVERNING SECURITIES HELD IN THE NEW TREASURY 
DIRECT SYSTEM

0
21. The authority citation for part 363 continues to read as follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3102, et seq., 
3105 and 3125.

0
22. Revise Sec.  363.3 to read as follows:


Sec.  363.3  What Treasury securities may be held in New Treasury 
Direct?

    Book-entry Series EE and I savings bonds may be held in New 
Treasury Direct.

0
23. Amend Sec.  363.6 by adding the following definition in 
alphabetical order:


Sec.  363.6  What special terms do I need to know to understand this 
part?

* * * * *
    Series EE savings bond is an accrual-type savings bond, either in 
definitive (paper) form or in book-entry form, that pays interest on 
the principal based on rates determined by Treasury.
* * * * *

0
24. Amend Sec.  363.34 by removing the word ``written'' from the 
section.


Sec.  363.38  [Amended]

0
25. Amend the section heading for Sec.  363.38 by removing the term 
``Series I'' from the heading.


Sec.  363.51  [Amended]

0
26. Amend the section heading for Sec.  363.51 by removing the term 
``Series I'' from the heading.


Sec. Sec.  363.53-363.54  [Amended]

0
27. Amend the section headings for Sec. Sec.  363.53-363.54 by removing 
the term ``Series I'' from each heading.


Sec. Sec.  363.56-363.58  [Amended]

0
28. Amend the section headings for Sec. Sec.  363.56-363.58 by removing 
the term ``Series I'' from each heading.


Sec. Sec.  363.65-363.66  [Amended]

0
29. Amend the section headings for Sec. Sec.  363.65-363.66 by removing 
the term ``Series I'' from each heading.


Sec. Sec.  363.80-363.83  [Amended]

0
30. Amend the section headings for Sec. Sec.  363.80-363.83 by removing 
the term ``Series I'' from each heading.


Sec.  363.85  [Amended]

0
31. Amend the section heading for Sec.  363.85 by removing the term 
``Series I'' from the heading.


Sec.  363.90  [Amended]

0
32. Amend the section heading for Sec.  363.90 by removing the term 
``Series I'' from the heading.


Sec.  363.95  [Amended]

0
33. Amend the section heading for Sec.  363.95 by removing the term 
``Series I'' from the heading.


Sec.  363.97  [Amended]

0
34. Amend the section heading for Sec.  363.97 by removing the term 
``Series I'' from the heading.


Sec. Sec.  363.105-363.106  [Amended]

0
35. Amend the section heading for Sec. Sec.  363.105-363.106 by 
removing the term ``Series I'' from each heading.


Sec. Sec.  363.111-363.113  [Amended]

0
36. Amend the section heading for Sec. Sec.  363.111-363.113 by 
removing the term ``Series I'' from each heading.


Sec.  363.125  [Amended]

0
37. Amend the section heading for Sec.  363.125 by removing the term 
``Series I'' from the heading.

Subpart C--Book-Entry Savings Bonds Purchased Through New Treasury 
Direct

0
38. Amend the heading for Subpart C by revising it to read as set forth 
above.

0
39. Revise Sec.  363.50 to read as follows:


Sec.  363.50  What Treasury securities does this subpart cover?

    This subpart covers Series EE and I book-entry savings bonds. The 
offering of Series EE savings bonds is contained in 31 CFR part 351. 
The offering of Series I savings bonds is contained in 31 CFR part 359.

0
40. Amend Sec.  363.52 by revising the heading and paragraph (a) to 
read as follows:


Sec.  363.52  What amount of book-entry Series EE and 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 for Series EE savings bonds, 
and $30,000 for Series I savings bonds.
* * * * *

0
41. Amend Sec.  363.55(b) and (d) by removing the term ``Series I'' 
from the text of each paragraph.


Sec.  363.95  [Amended]

0
42. Amend Sec.  363.95 by removing the term ``Series I'' from the 
introductory sentence.


Sec.  363.111  [Amended]

0
43. Amend Sec.  363.111 by removing the term ``Series I'' from the text 
of the section.


Sec.  363.112  [Amended]

0
44. Amend Sec.  363.112 by removing the term ``Series I'' from the text 
of the section.


Sec.  363.114  [Amended]

0
45. Amend Sec.  363.114 by removing the term ``Series I'' from the 
first sentence.

    Dated: May 2, 2003.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 03-11403 Filed 5-5-03; 11:29 am]
BILLING CODE 4810-39-P