Understanding Penalties for Early Withdrawal of Treasury I Bonds

Learn about the penalties for cashing in Treasury I bonds early and how to avoid forfeiting interest.

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For early withdrawal of Treasury I bonds, the penalty is that you forfeit the last three months of interest earned on the bonds. If you cash in the bonds before they are five years old, this penalty will apply. No penalty applies if the bonds are held for at least five years.

FAQs & Answers

  1. What happens if I cash in my I bonds before five years? You will forfeit the last three months of interest earned if you cash in I bonds before they are five years old.
  2. Is there a penalty for cashing in I bonds after five years? No penalty applies if the I bonds are held for at least five years.
  3. How can I redeem my Treasury I bonds? You can redeem your Treasury I bonds online or at a financial institution.
  4. Are Treasury I bonds a good investment? Treasury I bonds can be a good investment for those seeking a safe, inflation-protected savings option.