What Happens When Bonds Are Mature but Not Being Cashed In?

The maturity date on a bond tells you when the both is worth at least the principal. Bond maturities range from one day up to 30 years. According to a 2011 ABC News report, $16 billion in savings bonds have stopped earning interest but have not been cashed. The U.S. Department of Treasury's Bureau of Public Debt Division keeps records of all savings bonds for safekeeping.

Maturity Dates

A bond's maturity date is set when it is issued. Bonds are referred to as either being short-, medium- or long-term. A bond that matures within three years is referred to as a short-term bond. A medium-term bond typically matures in four to 10 years. Long-terms bonds take longer than 10 years to mature. When the bond reaches its maturity date, the final interest payment along with the principal are paid. If you choose to hold onto a bond after it matures, you will not lose any interest earnings. However, you can maximize your investment by cashing in the bond funds and reinvesting in another interest-bearing account.

Government Bonds

The federal government issues Series EE bonds, which continue to earn interest for a period of time after reaching the maturity dates. These bonds are purchased at one-half of their face value. The original maturity date is when the bonds reach face value. After reaching face value, the bonds go through extension periods earning interest for up to 30 years. The bonds no longer earn interest when they reach the final maturity date.

Tax Consequences

The U.S. Department of Treasury maintains a record of who owns each bond issued. A bond cannot be transferred to someone else. Once your Social Security number is assigned to a bond's serial number, the bond belongs to you. Even if you do not redeem the bonds that no longer earn interest, you are required to report the interest for the year of final maturity on your federal tax return. Failure to report the interest can lead to tax complications and penalties.

Lost Bonds

If your bond has been lost, damaged, stolen or destroyed, you can request a replacement bond. You also have the option to request a check or direct deposit if your bond has matured and you want the cash value. Treasuryhunt.gov allows you to request bonds by providing the issue date, denomination, purchaser's name, Social Security number and bond serial number. Try to provide as much information as possible to help locate your bond.

About the Author

Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.

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