How to Buy I Bonds for a Child (Step-by-Step Tutorial)

I Bonds are currently paying 7.12 percent for the first six months of the bond’s issued date if purchased between November 2021 and April 2022. It’s a great way to teach kids to save.

Link to "How to Buy I Bonds" video (for adult accounts): What are I Bonds + How to Buy I Bonds

In this video, I cover:
- How minors can own I bonds 1:43
- What a parent or guardian can do in a minor account 2:45
- I Bonds vs 529 for education 3:45
- How to buy paper I bonds with tax refund  7:19
- Step-by-step tutorial on how to create a minor account and buy electronic I bonds from TreasuryDirect 8:16

In general, children under the age of 18 can invest in stocks and bonds, not just I bonds. Because they are a minor, they cannot legally consent to the terms and conditions, so a parent or guardian, who acts as the custodian, can create an account and purchase investments on their behalf. The purchase limit for I bonds of $10,000 per calendar year also applies to minor accounts. Once you buy I bonds in a child’s name, it is considered an irrevocable gift to the child and should be treated as such. The control of the account is handed over to the child at the age of 18 whether you want it or not. If you purchase an I bond for the child before the age of 18, let's say you either find a more suitable investment that is outside of Treasury Direct or the child needs the cash for a special trip, etc., that’s perfectly fine. But when you open a TreasuryDirect account in the name of the child, you should consider it a completed gift for the child. It becomes the child's money, not yours. If the intent is to buy "extra" I bonds for yourself, the adult, you should not be purchasing in your child's name. If you have a living trust, you can buy an additional $10,000 worth of I bond through the trust. You can also overpay your taxes to ensure you get a tax refund, where you can buy up to another $5,000 per calendar year.

So what can a parent or guardian do in a minor account? As the custodian of the account, you can access the account at any time. You can buy and sell savings bonds and perform other transactions within the account on behalf of the minor. When your child turns 18 and establishes his/her own TreasuryDirect account, you may de-link the bonds into their new account. De-linking refers to moving the Linked account's bonds to a separate Primary TreasuryDirect account. Once the minor account is de-linked, it is deactivated and you will no longer be able to perform any transactions on the child’s behalf. If you choose to maintain the Minor account once the minor reaches 18, you are restricted from performing nearly all transactions, however, you can still purchase bonds on the child's behalf.

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