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Investing - Theory, News & General • Treasury Direct e-mail: undelivered gift bonds

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Let's approach this scientifically, meaning formulate a hypothesis given what we know, then test that hypothesis empirically with experiments.

Introduction

The TD site on gifts does not mention limits, and only mentions a minimum amount of time before delivery a gift (5 days).

The TD site on limits says the following:
"How much can one person or entity own in savings bonds? There is no limit on the total amount that any person or entity can own in savings bonds."

"How much can I spend each year on savings bonds? We count the limits by the Social Security Number of the first person named on the bond... A given Social Security Number or Employer Identification Number can buy up to these amounts in savings bonds each calendar year: ... $10,000 in electronic I bonds ... Gift bonds count toward the limit of the recipient, not the giver."

"What about bonds I give as gifts? ... The gift belongs to the person to whom you give the bond. Therefore, the amount counts in that person's limit, not in your limit. The gift counts for that person's limit in the year in which they get the bond."
Hypotheses
  • H1. "Limit" refers to a purchase limit of bonds by an individual for themselves. Setting aside entity accounts, I hypothesize that an individual can only purchase maximum $10k in electronic I bonds in a year.
  • H2. "Limit" does not apply to amounts purchased as gifts by others. That is, others may purchase any amount, including amounts exceeding $10k as gifts, even for the same individual.
  • H3. "Limit" only applies in the year a gift bond is delivered. Furthermore, because "limit" is a purchase limit for an individual, delivering a gift bond should have the following effects:
  • H3a. If the recipient has not already purchased bonds for themselves, the amount they can purchase will be reduced by the amount of gifts they have received.
  • H3b. If the recipient has already purchased bonds for themselves, they can receive gifts beyond the $10k purchase limit. This is because it is a purchase limit, and receiving a gift bond only affects the individual's ability to purchase additional bonds for themselves, not to receive additional gifts.
Empirical experiments to test the hypotheses
  • H2. I know from direct experience, as do many others here, that it is possible to purchase gifts in multiples of the $10k limit for a single individual in the same year.
  • H3a. I have not confirmed this and I'm not aware of anyone else who has. H3a and H3b are mutually exclusive, so it's only possible to test one in a given year (for the same gift recipient).
  • H3b. I know from direct experience that it is possible to deliver gifts beyond the $10k purchase limit when the recipient has already purchased bonds for themselves.
Conclusion

H1, H2, and H3b are confirmed. H3a is unconfirmed. Thus, all empirical evidence suggests that there is no limit on the amount of gifts an individual can receive in the same year. However, receiving gifts may reduce the recipient's ability to purchase bonds themselves.

Comment

Having worked in technology, government, and with government technology (such as it is), I can almost guarantee that the folks who dreamt up the gift policies 1) didn't thoroughly think through or formalize the interactions or edge cases around limits, and 2) didn't communicate them in sufficient detail to the folks who would need to implement the code to enforce the policies and limits. The entire system was probably designed by one contractor, and is maintained by a different contractor, and there may not even be a way to enforce the policies even if they were clearly defined.

Statistics: Posted by langelgjm — Sat Oct 19, 2024 12:06 am — Replies 42 — Views 2984



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