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How to Buy More than $10,000 in I Bonds Annually With This Loophole


In a world where the stock market is unpredictable and interest rates are rising, many investors are looking for someplace to put their money that is as close to risk-free as possible — even if it means forgoing the chance for a bigger reward. One increasingly popular pick are I Bonds, savings bonds issued by the U.S. government. These bonds are virtually risk free and have a robust fixed interest rate. There is generally a $10,000 limit per year for purchasing I Bonds, but there are a few ways to get around this limit.

For more help working I bonds into your financial strategy, consider working with a financial advisor.

Understanding I Bonds

I Bonds are issued by the federal government and carry a zero-coupon interest rate — plus, they are adjusted each year for inflation. The variable return will sit at 5.27% through April 2024. Unlike other U.S. securities, these bonds are sold at face value. This means if you purchase a $100 bond, the price will be $100. The bond duration runs from one year to 30 years.

Interest is paid every month and compounds every six months. The following deadlines apply to I Bonds:

  • Within one year of purchase: You cannot cash the bond.
  • Within one year and five years of purchase: You can cash the bond but forfeit the previous three months’ interest payments. This is known as “early redemption.”
  • After five years of purchase: You can cash the bond with no penalty.
  • After 30 years of purchase: The bond ceases to pay interest.

You don’t have to cash the bond after 30 years, but it will start to lose value against inflation. Unfortunately, there is a limit to how much you can buy each year, for yourself, in these bonds. That doesn’t mean you can’t get around that limit, though, depending on your situation.

How to Get Around the $10,000 I Bond Limit

i bonds limit loophole

These bonds are popular, but there is a limit of $10,000 per year that an individual can purchase. That said, there are some loopholes you can exploit if you want to put even more money into these bonds to nab that healthy 5.27% yield. Here are the most popular methods or loopholes:

1. Tax Refunds

If you are expecting to get a tax refund, you can purchase an additional $5,000 in I Bonds with the money the government owes you. There is one catch, though as they have to be paper I Bonds, not the more popular digital I Bonds. While this adds a bit of complexity, you can eventually convert these paper bonds to digital ones down the line.

2. Buying for Multiple Members of the Family

The limit is per person, so if you’re married then each spouse is allowed to purchase $10,000 in I bonds (plus the paper bonds if they have a tax return). You can also purchase up to $10,000 in I Bonds for your children, but they must be used for the child, possibly as a college savings tool.

3. Businesses and Trusts

Entities like businesses and trusts can also purchase up to $10,000 in I Bonds. This means that if you own a business and you have a living trust, you can purchase up to $30,000 in additional I Bonds each year.

While any of these can be a good way to increase the amount of I Bonds you’re able to buy, using multiple options together can help you maximize the number of bonds you’re able to purchase and earn the current high yield on.

Bottom Line

i bonds limit loophole

I Bonds are a virtually risk-free investment, which makes them very popular in times of market uncertainty such as right now and as inflation devalues your cash. That said, there is a $10,000 limit each year for purchasing them. There are several ways around this limit, though, including using your tax refund, having your spouse purchase bonds as well and using a separate legal entity like a trust. Finding the right solution(s) for you can increase the amount of “free money” you’re able to receive on these nearly risk-free investments.

Investing Tips

  • For help using I Bonds as part of your strategy, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Building a dividend stock portfolio is another way to use investments to create income.

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