[Federal Register Volume 70, Number 55 (Wednesday, March 23, 2005)]
[Rules and Regulations]
[Pages 14940-14948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5621]



[[Page 14939]]

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Part IV





Department of the Treasury





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Fiscal Service



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31 CFR Parts 315, 316, et al.



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

  Federal Register / Vol. 70 , No. 55 / Wednesday, March 23, 2005 / 
Rules and Regulations  

[[Page 14940]]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Parts 315, 316, 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: New Treasury Direct (also referred to as TreasuryDirect) is an 
account-based, book-entry, online system for purchasing, holding and 
conducting transactions in Treasury securities. This rule sets forth 
the terms and conditions for the conversion of definitive savings bonds 
of Series E, Series EE, and Series I to book-entry savings bonds in New 
Treasury Direct. Conversion offers the investor the convenience of a 
book-entry product, rather than having to provide safe storage for a 
paper product until final maturity or redemption. Conversion offers the 
government cost savings in the elimination of paper transactions such 
as reissues and the replacement of lost bonds. Conversion will further 
the underlying principle of New Treasury Direct, which is to enable 
investors to do business with Treasury online.

DATES: Effective: March 23, 2005.

ADDRESSES: You can download this final rule at the following Internet 
addresses: http://www.publicdebt.treas.gov or http://www.gpoaccess.gov/ecfr.

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: New Treasury Direct is an account-based, 
online, book-entry system for purchasing, holding, and conducting 
transactions in Treasury securities via the Internet. Currently, book-
entry Series EE and Series I savings bonds and certificates of 
indebtedness are offered for purchase through New Treasury Direct.
    For many years, Treasury has also offered definitive (paper) 
savings bond products with maturities up to 40 years. Now investors may 
convert eligible definitive savings bonds to book-entry savings bonds 
to be held in their New Treasury Direct accounts. Currently, Series E, 
Series EE, and Series I savings bonds, registered in the names of 
individuals in denominations of $25 or greater, are eligible for 
conversion. The owner of a definitive bond registered in the single 
owner or owner with beneficiary form of registration may convert the 
savings bond to a book-entry bond. Either co-owner of a definitive bond 
registered in the co-owner form of registration may convert the savings 
bond to a book-entry bond. Bonds purchased as gifts for others may also 
be converted.
    Definitive savings bonds have some contractual terms and conditions 
that are different from those for bonds originally issued as book-entry 
products. One of these differences is in the forms of registration 
available for definitive and for book-entry bonds. There are 
differences between the terms and conditions of a definitive bond 
registered in the coowner form of registration and a book-entry bond 
registered in the primary owner with secondary owner form of 
registration. There are also differences between the terms and 
conditions of a Series E bond registered in the owner with beneficiary 
form of registration and all other series of savings bonds, including 
book-entry bonds, registered in the same form of registration.
    When bonds of all series registered in the single owner form of 
registration, and Series EE or Series I bonds registered in the owner 
with beneficiary forms of registration, are converted, the bonds will 
follow the same terms and conditions as bonds originally issued as 
book-entry bonds, since the owner, by converting, has consented to the 
changes in the terms and conditions (e.g., one result is that the 
coowner form of registration will no longer be available for 
transactions conducted after conversion). The owner may use any online 
transaction available for book-entry bonds, including the ability to 
transfer a bond to the New Treasury Direct account of any third party. 
The converted bonds will be governed by subpart C of 31 CFR part 363.
    Bonds of all series registered in the coowner form of registration 
and Series E bonds registered in the owner with beneficiary form of 
registration will retain the protections for the non-converting coowner 
and beneficiary until such time as the non-converting coowner or 
beneficiary consents to a transaction that involves a change in 
registration. By consenting to such a transaction, the non-converting 
coowner or beneficiary is consenting to the bond being governed by the 
terms and conditions for a bond originally issued as a book-entry bond 
(see subpart C of 31 CFR part 363). The coowner and protected 
beneficiary registrations will no longer be available for those bonds.
    The purchaser of a definitive savings bond purchased as a gift for 
another may convert the bond to a book-entry bond in New Treasury 
Direct. We will presume that a bond that is not registered in the name 
of the account owner converting the bond as the single owner, either 
coowner, or the owner with a beneficiary, is a gift bond. The presumed 
gift bond will be released to the New Treasury Direct account of the 
account owner converting the bond. Once the gift bond has been placed 
in the account, the only transaction that the account owner may perform 
is to deliver the bond to the New Treasury Direct account of the 
registered owner. The registered owner may also request our assistance 
to deliver the bond to his or her account.
    We have made changes to several parts of Chapter 31. Generally, we 
have made changes to the offering circulars and governing regulations 
of Series E, Series EE, and Series I savings bonds to introduce the 
concept of conversion and add the appropriate references to applicable 
regulations.

Procedural Requirements

    This final rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, a 
regulatory assessment is not required.
    Because this final rule relates to matters of public contract and 
procedures for United States securities, notice and public procedure 
and delayed effective date requirements 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.

[[Page 14941]]

31 CFR Part 316

    Bonds, Government securities.

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, Federal Reserve system, Government securities, Securities.

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. Amend Sec.  315.0 by revising paragraph (a), to read as follows:


Sec.  315.0  Applicability.

* * * * *
    (a) Definitive (paper) United States Savings Bonds of Series E that 
have not been converted to book-entry savings bonds in New Treasury 
Direct, and Series H and United States Savings Notes, and
* * * * *

0
3. In Sec.  315.2, redesignate paragraphs (b) through (p) as paragraphs 
(c) through (q) and add new paragraph (b), to read as follows:


Sec.  315.2  Definitions.

* * * * *
    (b) Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
* * * * *

0
4. Add Sec.  315.3 to read as follows:


Sec.  315.3  Converting definitive savings bonds to book-entry bonds in 
New Treasury Direct.

    Series E savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is www.treasurydirect.gov. Bond owners who wish to 
convert their definitive savings bonds should follow online 
instructions for conversion. Regulations governing converted bonds are 
found at 31 CFR part 363.

PART 316--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES E

0
5. The authority citation for part 316 continues to read as follows:

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


0
6. Amend Sec.  316.2 by revising the first sentence of paragraph (a) to 
read as follows:


Sec.  316.2  Description of bonds.

    (a) General. Definitive (paper) Series E bonds bear a facsimile of 
the signature of the Secretary of the Treasury and of the Seal of the 
Department of the Treasury. * * *
* * * * *

0
7. Revise Sec.  316.3 to read as follows:


Sec.  316.3  Governing regulations.

    (a) The regulations in 31 CFR part 315 apply to definitive Series E 
bonds that have not been converted to book-entry bonds.
    (b) The regulations in 31 CFR part 363 apply to definitive Series E 
bonds that have been converted to book-entry bonds through New Treasury 
Direct.

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

0
8. The authority citation for part 351 continues to read as follows:

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


0
9. Amend Sec.  351.1 by revising paragraphs (a) and (b) to read as 
follows:


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 that have not been converted to book-entry 
bonds through New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series EE savings bonds that were originally issued 
as book-entry bonds in New Treasury Direct; and
    (2) definitive Series EE savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.
* * * * *

0
10. Amend Sec.  351.3 by adding the definition for ``Converted bond'' 
to read as follows:


Sec.  351.3  What special terms do I need to know to understand this 
part?

* * * * *
    Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
* * * * *

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

0
11. 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
12. Amend Sec.  353.0 by revising the first sentence of paragraph (a) 
and paragraph (c), to read as follows:


Sec.  353.0  Applicability.

    (a) The regulations in this part govern definitive (paper) Series 
EE savings bonds that have not been converted to book-entry bonds 
through New Treasury Direct and definitive Series HH savings bonds. * * 
*
* * * * *
    (c) The regulations in 31 CFR part 363 govern Series EE savings 
bonds that were originally issued as book-entry bonds in New Treasury 
Direct and Series EE savings bonds that were converted to book-entry 
bonds through New Treasury Direct.

0
13. In Sec.  353.2, redesignate paragraphs (b) through (l) as 
paragraphs (c) through (m) and add new paragraph (b), to read as 
follows:


Sec.  353.2  Definitions.

* * * * *
    (b) Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
* * * * *

0
14. Add Sec.  353.3 to read as follows:


Sec.  353.3  Converting definitive savings bonds to book-entry bonds in 
New Treasury Direct.

    Series EE savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is http://www.treasurydirect.gov.

[[Page 14942]]

Bond owners who wish to convert their definitive savings bonds should 
follow online instructions for conversion. Regulations governing 
converted bonds are found at 31 CFR part 363.

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

0
15. 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
16. Amend Sec.  359.1 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  359.1  What regulations govern Series I savings bonds?

    (a) The regulations in 31 CFR part 360 apply to definitive (paper) 
Series I savings bonds that have not been converted to book-entry bonds 
through New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series I savings bonds that were originally issued 
as book-entry bonds in New Treasury Direct; and
    (2) definitive Series I savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.
* * * * *

0
17. Amend Sec.  359.3 by adding the definition of ``Converted bond'', 
to read as follows:


Sec.  359.3  What special terms do I need to know to understand this 
part?

* * * * *
    Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
* * * * *

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.  360.0 to read as follows:


Sec.  360.0  Applicability.

    (a) The regulations in this part apply to definitive (paper) Series 
I savings bonds that have not been converted to book-entry bonds 
through New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series I savings bonds that were originally issued 
as book-entry bonds in New Treasury Direct; and
    (2) definitive Series I savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.

0
20. Amend Sec.  360.2 by redesignating paragraphs (b) through (l) as 
paragraphs (c) through (m), and add new paragraph (b), to read as 
follows:


Sec.  360.2  Definitions.

* * * * *
    (b) Converted savings bond means a savings bond originally issued 
as a definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
* * * * *

0
21. Add Sec.  360.3 to read as follows:


Sec.  360.3  Converting definitive savings bonds to book-entry bonds in 
New Treasury Direct.

    Series I savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is www.treasurydirect.gov. Bond owners who wish to 
convert their definitive savings bonds should follow online 
instructions for conversion. Regulations governing converted bonds are 
found at 31 CFR part 363.

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

0
22. 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.; 
31 U.S.C. 3121, et seq.


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


Sec.  363.3  What Treasury securities may I hold in my New Treasury 
Direct account?

    You may hold the following securities in your New Treasury Direct 
account:
    (a) Book-entry Series EE and Series I savings bonds;
    (b) Certificates of indebtedness; and
    (c) Series E, Series EE, and Series I savings bonds originally 
issued in definitive form that have been converted to book-entry bonds.

0
24. Revise Sec.  363.4 to read as follows:


Sec.  363.4  How is New Treasury Direct different from the 
TreasuryDirect system?

    New Treasury Direct is an online (Internet accessible only) system 
that currently provides for the purchase and holding of book-entry 
savings bonds and certificates of indebtedness, and the holding of 
definitive savings bonds that have been converted to book-entry bonds. 
There is a separate TreasuryDirect system (TreasuryDirect) available 
since 1986 for purchasing and holding only marketable Treasury 
securities as book-entry products. The TreasuryDirect system for 
marketable securities offers limited online services. The terms and 
conditions for the TreasuryDirect system for marketable securities are 
found at 31 CFR part 357.

0
25. Amend Sec.  363.6 by revising the definitions of ``Beneficiary'', 
``Owner,'' and ``Single owner,'' and adding the definitions of 
``Conversion account,'' ``Converted savings bond,'' ``Converting 
coowner,'' ``Coowner,'' and ``Non-converting coowner'' to read as 
follows:


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

* * * * *
    Beneficiary refers to the second individual named in the 
registration of a definitive savings bond, a converted definitive 
savings bond, or a book-entry security purchased through the New 
Treasury Direct system, registered, e.g., ``John Doe SSN 123-45-6789 
POD (payable on death to) Joseph Doe SSN 987-65-4321.
* * * * *
    Conversion account means a linked account in New Treasury Direct 
that contains only savings bonds that have been converted from 
definitive bonds to book-entry bonds.
    Converted savings bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
    Converting coowner is the coowner who initiates and completes the 
transaction to convert a definitive savings bond to a book-entry bond 
through his or her New Treasury Direct account.
    Coowner means either of the persons named in the registration of a 
definitive or a converted definitive savings bond, registered, e.g., 
``John Doe SSN 123-45-6789 or Joseph Doe.''
* * * * *
    Non-converting coowner is the coowner who does not participate in 
the transaction to convert a definitive savings bond to a book-entry 
bond.
* * * * *
    Owner is either a single owner, the first person named in the 
registration of a security held in the owner with beneficiary form of 
registration, the primary owner of a security held in the primary owner 
with secondary owner

[[Page 14943]]

form of registration, or either coowner of a converted savings bond.
* * * * *
    Single owner means the individual named in the registration of a 
book-entry Treasury security or a converted savings bond without a 
beneficiary, secondary owner, or coowner.
* * * * *

0
26. Amend Sec.  363.15 by revising paragraphs (a)(1), (a)(2), (a)(3), 
and (b)(3) to read as follows:


Sec.  363.15  What is a New Treasury Direct account?

* * * * *
    (a) * * *
    (1) Treasury securities purchased initially as book-entry 
securities that are your personal holdings, in sole owner, owner with 
beneficiary, and primary owner with secondary owner forms of 
registration;
    (2) Gifts that have not yet been delivered; and
    (3) Converted savings bonds that you have transferred from your 
conversion linked account.
    (b) * * *
    (3) Conversion account means a linked account in New Treasury 
Direct that contains only savings bonds that have been converted from 
definitive bonds to book-entry bonds.

0
27. Revise Sec.  363.24 to read as follows:


Sec.  363.24  What transactions can I perform online through my New 
Treasury Direct account?

    The following transactions are by way of illustration only, and are 
not intended to limit transactions that may be added to the system:
    (a) You can purchase, redeem, transfer, and change the registration 
of eligible securities held in your account;
    (b) You can grant and revoke the right to view an eligible security 
to any other New Treasury Direct account owner;
    (c) You can grant and revoke the right to redeem an eligible 
security on which you are the primary owner to the secondary owner, if 
the secondary owner is a New Treasury Direct account owner;
    (d) You can view or redeem eligible securities through your New 
Treasury Direct account on which you are the secondary owner, if the 
primary owner has granted those rights to you;
    (e) You can deliver gift securities to the New Treasury Direct 
account of another person;
    (f) You can make changes to your account information, including ACH 
information, password changes, and account security information;
    (g) You can view a history of purchases, transactions, changes to 
account information, and pending transactions;
    (h) You can schedule future transactions, and change or delete 
pending transactions;
    (i) You can open and access any linked accounts using your primary 
account as a portal; and
    (j) You can convert eligible definitive savings bonds to book-entry 
bonds.

0
28. Revise Sec.  363.36 to read as follows:


Sec.  363.36  What securities can I purchase and hold in my New 
Treasury Direct account?

    (a) You can purchase and hold eligible Treasury securities in your 
account. Eligible securities are Series EE and Series I savings bonds 
and certificates of indebtedness.
    (b) You can hold converted savings bonds in your account.

0
29. Revise Sec.  363.40 to read as follows:


Sec.  363.40  How are payments of principal and interest made?

    (a) Matured security. We will purchase a certificate of 
indebtedness in your name using the proceeds of a matured security. The 
certificate of indebtedness will be placed in your account.
    (b) Savings bond that is redeemed prior to final maturity. (1) 
Payment. When you redeem a savings bond and request payment of the 
proceeds, you must select a specific bank account at a United States 
depository financial institution for the receipt of your payment. This 
selected bank account may be the same one that you designated as your 
primary bank account in your New Treasury Direct account or it may be a 
different bank account. We will make the payment using the ACH method.
    (2) Purchase of a certificate of indebtedness. You may elect to 
purchase a certificate of indebtedness in your name using your 
redemption proceeds.

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


Sec.  363.50  What Treasury securities does this subpart govern?

    This subpart governs:
    (a) Series EE and Series I book-entry savings bonds that were 
originally issued as book-entry bonds through New Treasury Direct; and
    (b) Converted savings bonds that are registered in:
    (1) The single owner form of registration of any series,
    (2) The owner with beneficiary form of registration of Series EE 
and Series I savings bonds,
    (3) The owner with beneficiary form of registration of Series E 
savings bonds in which the beneficiary has consented to a change in the 
registration of the bond after conversion, and
    (4) The coowner form of registration of any series in which the 
non-converting coowner has consented to a change in the registration of 
the bond after conversion.


Sec. Sec.  363.175-363.177  [Redesignated as Sec. Sec.  363.200-
363.202]

0
31. Redesignate Sec. Sec.  363.175-363.177 as Sec. Sec.  363.200-
363.202.

0
32. Add subpart E to read as follows:

Subpart E--Conversion of a Definitive Savings Bond

Sec.
363.160 What subparts govern the conversion of definitive savings 
bonds?
363.161 What definitive savings bonds are eligible to be converted 
to book-entry bonds?
363.162 Who may convert a definitive savings bond?
363.163 How do I convert an eligible definitive savings bond?
363.164 Is a converted savings bond eligible to be converted back 
into a definitive bond?
363.165 What happens when I convert a savings bond that is 
registered in my name as the owner, either coowner, or the owner 
with a beneficiary?
363.166 What happens when I convert a savings bond that is not 
registered in my name as owner, either coowner, or owner with 
beneficiary (including a bond registered in the name of a minor)?
363.167 How will a converted savings bond be registered?
363.168 What rules regarding registration apply to a converted 
savings bond?
363.169 What transactions can I conduct in a converted savings bond 
on which I am registered as the single owner, either coowner, or the 
owner with a beneficiary?
363.170 What transactions can I conduct in a savings bond that I 
converted on which I am not registered as the owner, either coowner, 
or owner with beneficiary?
363.171 How do I redeem a converted savings bond?
363.172 What happens when a New Treasury Direct account owner dies 
and his or her estate is entitled to a converted savings bond held 
in the account?
363.173 What are the rules for judicial and administrative actions 
involving a converted savings bond held in New Treasury Direct?
363.174 What evidence is required to establish the validity of 
judicial proceedings involving a converted savings bond?
363.175 Will Public Debt pay a converted savings bond pursuant to a 
forfeiture proceeding?
363.176 May a converted savings bond be pledged or used as 
collateral?
363.177 Does Public Debt reserve the right to require that any 
transaction in a

[[Page 14944]]

converted savings bond be conducted in paper form?
363.178 Does Treasury reserve the right to suspend transactions in a 
converted savings bond?
363.179 Does Public Debt make any reservations as to the conversion 
of an eligible savings bond?
363.180-363.199 [Reserved]


Sec.  363.160  What subparts govern the conversion of definitive 
savings bonds?

    (a) This subpart governs:
    (1) The process of converting definitive savings bonds of all 
eligible series and types of registration to book-entry bonds in New 
Treasury Direct;
    (2) Converted savings bonds of all series registered in the coowner 
form of registration, unless the non-converting coowner consents to a 
change in the registration of the bonds after conversion;
    (3) Converted savings bonds of Series E registered in the owner 
with beneficiary form of registration, unless the beneficiary consents 
to a change in the registration of the bonds after conversion; and
    (4) Converted savings bonds of all series that are held in the as a 
gift bond by the person who converted the bonds.
    (b) Subpart C governs:
    (1) Converted savings bonds of any series registered in the single 
owner form of registration;
    (2) Converted Series EE and Series I savings bonds registered in 
the owner with beneficiary form of registration;
    (3) Converted Series E savings bonds registered in the owner with 
beneficiary form of registration, where the beneficiary has consented 
to a change in the registration of the bonds after conversion; and
    (4) Converted savings bonds of all series registered in the coowner 
form of registration, where the non-converting coowner has consented to 
a change in the registration of the bonds after conversion.


Sec.  363.161  What definitive savings bonds are eligible to be 
converted to book-entry bonds?

    Series E, Series EE, and Series I savings bonds issued in 
denominations of $25 or greater, in single owner, coowner, or owner 
with beneficiary forms of registration, are eligible for conversion to 
book-entry bonds in New Treasury Direct.


Sec.  363.162  Who may convert a definitive savings bond?

    The owner of a New Treasury Direct primary account may convert a 
definitive savings bond.
    (a) Bond that is registered to the account owner. The owner of a 
definitive savings bond registered in the single owner form of 
registration, either coowner of a bond registered in the coowner form 
of registration, and the owner of a bond registered in the owner with 
beneficiary form of registration of all eligible series, may convert 
that definitive bond to a book-entry bond to be held in his or her New 
Treasury Direct account.
    (b) Bond that is registered to someone other than the account 
owner. We will convert an eligible definitive savings bond submitted by 
someone other than the registered owner of the savings bond. See the 
special rules in section 363.166.


Sec.  363.163  How do I convert an eligible definitive savings bond?

    We will provide online instructions for converting your definitive 
savings bond. You must surrender to us the definitive bond to be 
converted at the time of conversion.


Sec.  363.164  Is a converted savings bond eligible to be converted 
back into a definitive bond?

    Once a definitive savings bond has been converted to a book-entry 
bond, it may not be converted back into a definitive bond.


Sec.  363.165  What happens when I convert a savings bond that is 
registered in my name as the owner, either coowner, or the owner with a 
beneficiary?

    (a) Unmatured savings bond. When the conversion is approved, an 
unmatured savings bond that is registered in the name of the New 
Treasury Direct account owner as single owner, either coowner, or owner 
with beneficiary, will be released to the account owner's conversion 
linked account.
    (b) Matured savings bond. A matured savings bond that is registered 
in the name of the New Treasury Direct account owner as single owner, 
either coowner, or owner with beneficiary, will be converted to a book-
entry bond and automatically redeemed. The redemption proceeds will be 
used to purchase a certificate of indebtedness in the account owner's 
name in his or her primary account.


Sec.  363.166  What happens when I convert a savings bond that is not 
registered in my name as owner, either coowner, or owner with 
beneficiary (including a bond registered in the name of a minor)?

    We will presume that a savings bond registered in the name of 
someone other than the New Treasury Direct account owner (including a 
bond registered in the name of a minor), was purchased by the account 
owner as a gift for the registered owner.
    (a) Unmatured savings bond. (1) General. An unmatured savings bond 
registered in the name of someone other than the account owner will be 
converted to a book-entry bond, released as a gift bond to the account 
owner's conversion linked account, and held until delivered to the New 
Treasury Direct account (or minor linked account, if the registered 
owner is a minor) of the registered owner.
    (2) Delivery of unmatured gift bond to registered owner. The New 
Treasury Direct account owner may deliver the converted gift bond to 
the New Treasury Direct account (or minor linked account, if the 
registered owner is a minor) of the registered owner, or, if the bond 
is registered in the coowner form of registration, to the account of 
either coowner. A bond registered in coowner or owner with beneficiary 
form of registration will retain the coowner or beneficiary form of 
registration upon delivery.
    (b) Matured savings bond. (1) General. A matured savings bond 
registered in the name of someone other than the account owner will be 
converted to a book-entry bond, released as a gift bond into the 
account owner's conversion linked account, and automatically redeemed. 
We will hold the redemption proceeds in the name of the registered 
owner of the definitive bond until the proceeds are delivered to the 
New Treasury Direct account (or minor linked account, if the registered 
owner is a minor) of the registered owner.
    (2) Delivery of matured, redeemed bond proceeds to registered 
owner. If the gift bond has matured and has been automatically 
redeemed, then the New Treasury Direct account owner may direct that 
the held redemption proceeds be delivered to the New Treasury Direct 
account of the registered owner (or minor linked account, if the 
registered owner is a minor), where we will use the proceeds to 
purchase a certificate of indebtedness in the name of the registered 
owner. If the bond is registered in the coowner form of registration, 
the account owner may direct that the held redemption proceeds be 
delivered to the account of either coowner, where we will use the 
proceeds to purchase a certificate of indebtedness in the name of the 
coowner to whose account the bond was delivered.


Sec.  363.167  How will a converted savings bond be registered?

    The registration of the converted bond will be the same as on the 
definitive bond, provided that it was registered properly in an 
authorized form of registration. We will change a definitive

[[Page 14945]]

savings bond that was not registered in an authorized form of 
registration to the closest authorized form of registration. For 
example, a definitive savings bond erroneously registered ``John Doe 
and Jane Doe'' will be changed to ``John Doe or Jane Doe.'' We are not 
liable to any person for any such decision as to the closest form of 
authorized registration.


Sec.  363.168  What rules regarding registration apply to a converted 
savings bond?

    (a) Savings bond of any series registered in the single owner form 
of registration. By converting a definitive bond of any eligible series 
registered in the single owner form of registration to book-entry in 
New Treasury Direct, the owner has consented to the bond being governed 
by the rules regarding registration contained in subpart C of this 
part.
    (b) Savings bond of Series EE or Series I registered in the owner 
with beneficiary form of registration. By converting a definitive bond 
of Series EE or Series I registered in an owner with beneficiary form 
of registration to a book-entry bond in New Treasury Direct, the owner 
has consented to the bond being governed by the rules regarding 
registration contained in subpart C of this part.
    (c) Savings bond of Series E registered in the owner with 
beneficiary form of registration. The registration of a converted 
savings bond of Series E registered in the owner with beneficiary form 
of registration may be changed upon the request of the owner and the 
consent of the beneficiary. The transaction will not be conducted 
through the registered owner's New Treasury Direct account.
    (d) Savings bond of any series registered in the coowner form of 
registration. The registration of a converted savings bond of any 
eligible series registered in the coowner form of registration may be 
changed upon the request of one coowner and the consent of the other 
coowner. The transaction will not be conducted through the registered 
owner's New Treasury Direct account.


Sec.  363.169  What transactions can I conduct in a converted savings 
bond on which I am registered as the single owner, either coowner, or 
the owner with a beneficiary?

    (a) Savings bond of any series registered in the single owner form 
of registration. By converting a definitive savings bond to a book-
entry bond, you have consented to the bond being treated as if it were 
originally issued as a book-entry bond in New Treasury Direct. The bond 
will be subject to the provisions of subpart C of this part. Any 
transaction available for a book-entry bond originally issued in the 
New Treasury Direct system is available for a converted bond registered 
in single owner form of registration.
    (b) Savings bond of Series EE and Series I registered in the owner 
with beneficiary form of registration. By converting a definitive 
savings bond to a book-entry bond, you have consented to the bond being 
treated as if it were originally issued as a book-entry bond in New 
Treasury Direct. The bond will be subject to the provisions of subpart 
C of this part. Any transaction available for a book-entry bond 
purchased in the New Treasury Direct system is available for a 
converted bond of Series EE and Series I registered in the owner with 
beneficiary form of registration.
    (c) Savings bond of Series E registered in the owner with 
beneficiary form of registration. The owner of a converted Series E 
bond registered in the owner with beneficiary form of registration may 
make the following transactions:
    (1) Provide view rights to the beneficiary. The owner may provide 
the beneficiary with the right to view the bond in the beneficiary's 
New Treasury Direct account. Once the right to view the bond is 
provided to the beneficiary, the owner may not revoke that right.
    (2) Transfer without change in registration. The owner may transfer 
the bond without a change of registration to another account in the 
name of the owner.
    (3) Remove the beneficiary from the registration. The owner may 
remove the beneficiary's name from the registration with the consent of 
the beneficiary. The transaction will not be conducted through the 
registered owner's New Treasury Direct account. The bond will be 
changed to the single owner form of registration. Once the transaction 
is completed, the bond will be treated as a bond originally issued as a 
book-entry bond in New Treasury Direct, and will be subject to subpart 
C of this part. The owner may then perform any transaction available 
for book-entry bonds purchased in the New Treasury Direct system.
    (4) Transfer to the beneficiary or a third party with a change in 
registration. The owner may remove his or her name from the 
registration and transfer the bond to the account of the beneficiary or 
a third party, with the consent of the beneficiary. The transaction 
will not be conducted through the registered owner's New Treasury 
Direct account. The bond will be transferred in the single owner form 
of registration. Once the transfer is completed, the bond will be 
treated as a bond originally issued as a book-entry bond in New 
Treasury Direct, and will be subject to subpart C of this part. The 
owner may then perform any transaction available for book-entry bonds 
purchased in the New Treasury Direct system.
    (d) Savings bond of any series registered in the coowner form of 
registration. The converting coowner of a converted bond registered in 
the coowner form of registration may make the following transactions:
    (1) Provide view or transact rights to non-converting coowner. The 
converting coowner may provide the non-converting coowner with the 
rights to view the bond or to view and redeem the bond through the non-
converting coowner's New Treasury Direct account. Once either of these 
rights is provided to the non-converting coowner, the converting 
coowner may not revoke the right.
    (2) Transfer without change in registration. The converting coowner 
may transfer the bond without a change in registration to another 
account in the name of the converting coowner. The bond may be 
transferred without the consent of the non-converting coowner, and will 
retain the coowner registration.
    (3) Remove a coowner from the registration. The converting coowner 
(or the non-converting coowner, if the bond has been previously 
transferred to the account of the non-converting coowner) may remove 
the other coowner from the registration. The consent of the other 
coowner is required. The bond must reside in the account of the coowner 
who is requesting the transaction. The transaction will not be 
conducted through the registered owner's New Treasury Direct account. 
The bond's registration will be changed to the single owner form of 
registration. Once this transaction is completed, the bond will be 
treated as a bond originally issued as a book-entry bond in New 
Treasury Direct, and will be subject to subpart C of this part. The 
owner may then perform any transaction available for book-entry bonds 
purchased in the New Treasury Direct system.
    (4) Transfer to non-converting coowner or a third party with a 
change in registration. The converting coowner may remove his or her 
name from the registration and transfer the bond to either the account 
of the non-converting coowner or to the account of a third party. The 
consent of the non-converting coowner is required. The transaction will 
not be conducted through the registered owner's New Treasury Direct 
account. The bond will be transferred in the single owner form of 
registration. Once the transfer is completed, the bond will be treated 
as a bond originally issued as a book-entry

[[Page 14946]]

bond in New Treasury Direct, and will be subject to subpart C of this 
part. The owner may then perform any transaction available for book-
entry bonds purchased in the New Treasury Direct system.


Sec.  363.170  What transactions can I conduct in a savings bond that I 
converted on which I am not registered as the owner, either coowner, or 
owner with beneficiary?

    The only transaction that you may conduct on a savings bond that 
you converted on which you are not registered as the owner, either 
coowner, or owner with beneficiary is to deliver the converted bond to 
the New Treasury Direct account of the registered owner.


Sec.  363.171  How do I redeem a converted savings bond?

    (a) Before final maturity. (1) Savings bond of any series 
registered either in the single owner or owner with beneficiary form of 
registration. You may redeem your converted savings bond any time prior 
to final maturity after the minimum holding period through your New 
Treasury Direct account.
    (2) Savings bond of any series registered in the coowner form of 
registration. The converting coowner may redeem the converted savings 
bond at any time prior to final maturity after the minimum holding 
period through his or her New Treasury Direct account. The non-
converting coowner may redeem the converted savings bond at any time 
prior to final maturity after the minimum holding period provided that 
he or she has been granted transaction rights in the converted bond by 
the converting coowner.
    (b) Upon final maturity. (1) Savings bond of any series registered 
in the single owner, owner with beneficiary, or coowner forms of 
registration. If you have not previously redeemed or transferred your 
converted savings bond, it will be automatically redeemed for you at 
final maturity.
    (2) The redemption proceeds will be automatically used to purchase 
a certificate of indebtedness registered in your name and held in your 
New Treasury Direct account.


Sec.  363.172  What happens when a New Treasury Direct account owner 
dies and his or her estate is entitled to a converted savings bond held 
in the account?

    (a) Estate is being administered. (1) We will require appropriate 
proof of appointment for the legal representative of the estate. 
Letters of appointment must be dated within six months of submission, 
unless the appointment was made within one year before submission.
    (2) The legal representative of the estate may request the payment 
of a converted savings bond, if the converted savings bond is eligible 
for redemption, to the estate or to the person(s) entitled, or may 
request transfer of the converted savings bond to the New Treasury 
Direct account(s) of the person(s) entitled, if the converted savings 
bond is eligible for transfer.
    (3) The legal representative of the estate may not purchase a bond 
on behalf of the estate.
    (4) If payment is requested, we will require ACH instructions.
    (b) Estate has been settled previously. If the estate has been 
previously settled through judicial proceedings, the person(s) entitled 
may request payment of a converted savings bond, if the converted 
savings bond is eligible for redemption, or may distribute the 
converted savings bond by transferring it to the New Treasury Direct 
account of the person(s) entitled, if the converted savings bond is 
eligible for transfer. If payment is requested, we will require ACH 
instructions. We will require a certified copy of the court-approved 
final accounting for the estate, the court's decree of distribution, or 
other appropriate evidence.
    (c) Summary administration procedures. If there is no formal 
administration and no representative of the estate is to be appointed, 
the person(s) entitled under state law summary or small estates 
procedures may request payment of a converted savings bond, if the 
converted savings bond is eligible for redemption, or may distribute 
the converted savings bond by transferring it to the New Treasury 
Direct account(s) of the person(s) entitled, if the converted savings 
bond is eligible for transfer. We will require appropriate evidence. If 
payment is requested, we will require ACH instructions.
    (d) Survivors' order of precedence for payment or transfer. If 
there has been no administration, no administration is contemplated, no 
summary or small estate procedures have been used, and the total 
redemption value of the Treasury securities that are the property of 
the decedent's estate is $100,000 or less, then the converted savings 
bond or redemption proceeds may be distributed to the persons named in 
the following order of precedence:
    (1) There is a surviving spouse and no surviving child or 
descendants 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 
descendants of deceased children: to the child or children of the 
decedent, and the descendants of deceased children, by representation.
    (4) There are no surviving spouse, no surviving child, and no 
surviving descendants of deceased children: to the parents of the 
decedent, one-half to each, or in full to the survivor.
    (5) There are no surviving spouse, no surviving child or surviving 
descendants of deceased children, and no surviving parents: to the 
brothers and sisters and descendants of deceased brothers and sisters 
by representation.
    (6) There are no surviving spouse, no surviving child or surviving 
descendants of deceased children, no surviving parents, and no brothers 
or sisters or descendants of deceased brothers and sisters: to other 
next of kin, as determined by the laws of the decedent's domicile at 
the time of death.
    (7) There are no surviving spouse, no surviving child or surviving 
descendants of deceased children, no surviving parents, no brothers or 
sisters or descendants of deceased brothers and sisters, and no next of 
kin, as determined by the laws of the decedent's domicile at the time 
of death: to persons related to the decedent by marriage, i.e., heirs 
of a spouse of the last decedent where the spouse predeceased that 
registrant.
    (8) There are no surviving spouse, no surviving child or surviving 
descendants of deceased children, no surviving parents, no brothers or 
sisters or descendants of deceased brothers and sisters, no next of 
kin, as determined by the laws of the decedent's domicile at the time 
of death, and no persons related to the decedent by marriage: to the 
person who paid the burial and funeral expenses, or a creditor of the 
decedent's estate, but payment may be made only to the extent that the 
person has not been reimbursed. Transfers are not permitted.
    (9) Escheat according to the applicable state law.
    (e) When we make payments according to paragraph (d) of this 
section, we will make the payments by the ACH method to either a person 
individually, or individually and on behalf of all other persons 
entitled. We will require ACH instructions for payment. A person who 
receives a converted savings bond or payment of security proceeds 
individually and on behalf of others agrees to make

[[Page 14947]]

distribution or payment to the other persons entitled by the law of the 
decedent's domicile. The provisions of this section are for our 
convenience and do not determine ownership of a converted savings bond 
or its proceeds. We may rely on information provided by the person who 
requests payment or transfer, and are not liable for any action taken 
in reliance on the information furnished.


Sec.  363.173  What are the rules for judicial and administrative 
actions involving a converted savings bond held in New Treasury Direct?

    (a) Notice of adverse claim or pending judicial proceedings. We are 
not subject to and will not accept a notice of an adverse claim or 
notice of pending judicial proceedings involving a converted savings 
bond held in New Treasury Direct.
    (b) Competing claims to a converted savings bond. Treasury, Public 
Debt, and the Federal Reserve Banks are not proper defendants in a 
judicial proceeding involving competing claims to a converted savings 
bond held in New Treasury Direct.
    (c) Divorce decree. We will recognize a divorce decree that either 
disposes of a converted savings bond held in New Treasury Direct or 
ratifies a property settlement agreement disposing of the converted 
savings bond of either of the parties. If the divorce decree does not 
set out the terms of the property settlement agreement, we will require 
a certified copy of the agreement.
    (d) Final court order. We will recognize a final order entered by a 
court that affects ownership rights in a converted savings bond held in 
New Treasury Direct only to the extent that the order is consistent 
with the provisions of this part. The owner of the converted savings 
bond must be a party to the proceedings.
    (e) Levy to satisfy money judgment. We will honor a payment request 
submitted by a person appointed by a court and having authority under 
an order of a court to dispose of a converted savings bond held in New 
Treasury Direct pursuant to a money judgment against the owner of the 
converted savings bond, as owner is defined in section 363.6 of this 
part. We will only make payment to the extent of the money judgment; we 
will not transfer the bond.
    (f) IRS administrative levy. We will honor an IRS administrative 
levy under section 6331 of the Internal Revenue Code with respect to 
the owner, as owner is defined in section 363.6 of this part.
    (g) Trustee in bankruptcy, a receiver of an insolvent's estate, a 
receiver in equity, or a similar court officer. We will honor a payment 
request submitted by a trustee in bankruptcy, a receiver of an 
insolvent's estate, a receiver in equity, or a similar court officer, 
if the original court order is against the owner, as owner is defined 
in section 363.6 of this part; we will not transfer the bond.
    (h) Court order that attempts to defeat or impair survivorship 
rights. We will not recognize a judicial determination that attempts to 
defeat or impair the survivorship rights of a beneficiary, secondary 
owner, coowner, or the registered owner(s) of an undelivered gift that 
is a converted savings bond held in New Treasury Direct.


Sec.  363.174  What evidence is required to establish the validity of 
judicial proceedings involving a converted savings bond?

    (a) We will require certified copies of the final judgment, decree, 
or court order, and any necessary supplementary proceedings.
    (b) A payment request by a trustee in bankruptcy or a receiver of 
an insolvent's estate must be supported by evidence of appointment and 
qualification.
    (c) A payment request by a receiver in equity or a similar court 
officer (other than a receiver of an insolvent's estate) must be 
supported by a copy of an order that authorizes the receiver or similar 
court officer to dispose of the converted savings bond.


Sec.  363.175  Will Public Debt pay a converted savings bond pursuant 
to a forfeiture proceeding?

    (a) General. We will honor a judicial or administrative forfeiture 
order submitted by a federal agency. We will rely exclusively upon the 
information provided by the forfeiting agency and will not make any 
independent evaluation of the validity of the forfeiture order, the 
request for payment, or the authority of the individual signing the 
payment request. The amount to be paid is limited to the redemption 
value of the converted savings bond as of the date of forfeiture.
    (b) Definition of special terms relating to forfeitures.
    Contact point means the individual designated by the Federal 
investigative agency, United States Attorney's Office, or forfeiting 
agency, to receive referrals from Public Debt.
    Forfeiting agency means the Federal law enforcement agency 
responsible for the forfeiture.
    Forfeiture means the process by which property may be forfeited by 
a Federal agency. Administrative forfeiture is forfeiture by a Federal 
agency without judicial proceedings; judicial forfeiture is a 
forfeiture through either a civil or criminal proceeding in a United 
States District Court resulting in a final judgment and order of 
forfeiture.
    (c) Procedures for a forfeiting agency to request forfeiture of 
Treasury securities. A forfeiting agency must request forfeiture. An 
individual authorized by the forfeiting agency must sign the 
transaction request. The request must be mailed to the Department of 
the Treasury, Bureau of the Public Debt, Parkersburg, WV 26106-1328.
    (d) Public Debt procedures upon receipt of forfeiture request. Upon 
receipt and review of the transaction request, we will make payment to 
the forfeiture fund specified. We will record the forfeiture, the 
forfeiture fund into which the proceeds were paid, the contact point, 
and any related information.
    (e) Inquiries from previous owner. All inquiries or claims from the 
previous owner will be referred to the contact point of the forfeiting 
agency. We will tell the person who inquired that we referred his or 
her inquiry to the contact point. We will not investigate the inquiry. 
We will defer to the forfeiting agency's determination of the 
appropriate course of action, including settlement where appropriate. 
Any settlement will be paid from the forfeiture fund into which the 
proceeds were deposited.


Sec.  363.176  May a converted savings bond be pledged or used as 
collateral?

    A converted savings bond may not be pledged or used as collateral 
for the performance of an obligation.


Sec.  363.177  Does Public Debt reserve the right to require that any 
transaction in a converted savings bond be conducted in paper form?

    We reserve the right to require any transaction to be conducted in 
paper form. Signatures on paper transactions must be certified or 
guaranteed as provided in Sec.  363.43.


Sec.  363.178  Does Treasury reserve the right to suspend transactions 
in a converted savings bond?

    We reserve the right to suspend transactions in a converted savings 
bond held in New Treasury Direct if we deem it to be in the best 
interests of the United States.


Sec.  363.179  Does Public Debt make any reservations as to the 
conversion of an eligible savings bond?

    We may reject any application for conversion or refuse to convert a 
savings

[[Page 14948]]

bond 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. Sec.  363.180-363.199  [Reserved]

    Dated: January 15, 2005.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 05-5621 Filed 3-22-05; 8:45 am]
BILLING CODE 4810-39-P