The bonds you're exchanging must be at least six months old, must be worth at least $500 (current redemption value), and cannot have been matured for longer than a year. Series HH bonds are available in multiples of $500. If the value of bonds being exchanged isn't a multiple of $500, you can add some cash to the transaction or receive some cash so a multiple of $500 is reached. For example, if you have $1,720 in Series EE/E bonds and notes that you want to exchange, you can either add $280 in cash and receive $2,000 worth of HH bonds or you can receive $220 in cash and $1,500 in HH bonds. Note that no more than $499.99 may be added to or received in cash from a bond's value in an exchange transaction.

If you've deferred reporting interest on your EE/E bonds and savings notes as they increased in value, you may continue to defer reporting this accrued interest until the Series HH bonds you receive in exchange are cashed or stop earning interest in 20 years. The amount of the tax-deferred interest included in the value of each HH bond is shown on the bond. When you cash your HH bonds or when they mature, you'll need to include this interest on your Federal income tax return for that year.

If you choose to receive some cash as part of an exchange transaction, you'll be reducing the amount of interest on which you can continue to defer taxes. Some or all of the cash payment you receive will be considered accrued interest, which you must report as income on your Federal income tax return for the year in which the exchange occurs. For example, assume you are exchanging $1,700 in EE/E bonds for $1,500 in HH bonds and $200 in cash. Also assume that these bonds have earned $275 in interest that you haven't yet reported on your taxes. In this exchange, the entire $200 in cash you receive is considered interest which must be reported on your Federal tax return in the year of the exchange. Taxes on the remaining $75 in interest is deferred and each $500 portion of the HH bonds will be considered to "include" $25 in deferred interest. To continue to defer reporting the $275 in interest on your taxes, you'd have to add $300 in cash to the transaction and purchase $2,000 of HH bonds.

Although financial institutions that are savings bond paying agents can't issue Series HH bonds, they can accept and process the bonds you're exchanging, help you determine their value, assist you in filling out your exchange application, and send it to a Federal Reserve Bank.

If you'd like to send your exchange transaction directly to a Federal Reserve Bank, you must complete and sign the request for payment on the back of each bond or note you're exchanging. You must sign the bonds in the presence of an officer of a financial institution authorized to certify or guarantee signatures. Most financial institutions have people who can certify your signature. You'll also need to complete and sign the exchange application and send it to a Federal Reserve Bank along with the bonds or notes and any other information that may be required.

Since interest payments on HH bonds are made electronically, you'll need to sign up for Direct Deposit of the interest with your financial institution. More information is also included on Form 3253.

Return to Main Menu for Series EE/E Bonds