Can You Gift Treasury Bonds? 6 Steps to Correctly Transfer Securities

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The short answer to whether or not you can gift treasury bonds is; absolutely. But since they are U.S. government securities that are registered in your name, there are some steps you have to take in order to correctly complete the gift.

Because Treasury bonds are held in different types of accounts, there are several ways to handle the transfer.

In fact there are six different ways to gift Treasury bonds, depending on where and how you currently hold the securities.

1. Transfers of Securities from Legacy Treasury Direct to TreasuryDirect

The Treasury Department is phasing out the Legacy Direct System, so if you hold your bonds through that system, and want to gift them, you will have to do so through Treasury Direct, the government’s current web platform for its debt securities.

Follow these steps:

  • Open an account at TreasuryDirect, if you don’t already have one
  • Complete the Legacy Direct form Security Transfer Request (PD F 5179)
  • In Section 3 of the transfer request, check the box for Transfer to an Established Online Treasury Direct Account Number
  • Have your signature on the form certified
  • Mail the form to the Bureau of Public Debt at the address indicated on the form

2. Transfer of Securities from the Commercial Book-Entry System to TreasuryDirect

If your Treasury securities are held through a third party trustee, such as a bank or brokerage firm, you can have the custodian transfer the securities into TreasuryDirect. (Don't be intimidated by the term “Commercial Book-Entry System” — it's Treasury-speak for banks and brokers.)

Open a TreasuryDirect account in your own name, if you don’t already have one. Once you have an account, provide your bank or broker with the following information so they can affect the transfer:

  • The receiving bank name, which will be “TREASURYDIRECT“, in all uppercase letters, and with no punctuation
  • The ABA or routing number: 051736158
  • The account number of your TreasuryDirect account

3. Transfer of Securities from TreasuryDirect to the Commercial Book-Entry System

This is similar to what we just covered, except that you’re going the other way, moving your Treasury securities from TreasuryDirect and into a bank or brokerage firm.

  • On TreasuryDirect, go to “Manage Direct”, and choose the appropriate option
  • Be prepared to provide the name of the bank or broker and the routing number of that institution
  • Certain transactions may require that you submit paper forms, instead of completing the transfer on the website; a message will pop up if that’s the case, and it will direct you where to go next

4. Transfer of Securities from Legacy Treasury Direct to the Commercial Book-Entry System

You can move the securities from a Legacy Treasury Direct account to a bank or brokerage firm by doing the following:

  • Complete the Security Transfer Request (PD F 5179)
  • Have your signature on the form certified
  • Mail the form to Treasury Retail Securities Site, P.O. Box 9150, Minneapolis, MN 55480-9150

5. Transfer of Securities within TreasuryDirect

Treasury securities can be transferred to a primary or custom account, or a minor linked account, by doing the following:

  • On the TreasuryDirect site, under “Manage Direct”, choose the option for making the transfer
  • Be ready to provide the gift recipient’s Social Security number and TreasuryDirect account number when transferring the securities to another primary account
  • Again, certain transfers may require you to submit paper forms, and a message will display on the site providing a link to the necessary documents

6. Transfer of Securities within Legacy Treasury Direct

You can follow these procedures if both you and the intended gift recipient each have a Legacy Treasury Direct account:

  • Complete the Security Transfer Request (PD F 5179)
  • Have your signature on the form certified
  • Mail the form to Treasury Retail Securities Site, P.O. Box 9150, Minneapolis, MN 55480-9150

Limits on Gifts for Income Tax Purposes

For income tax purposes, there are limits on the value of any gifts that you give to others (other than your spouse). Under current law, the limit is $14,000 per person in order to avoid having to pay the gift tax as the donor.

The tax can be up to 40% of the amount of the gift. If you as the gift donor do not pay the tax on the gift, the gift recipient could be held liable for the tax.

Alternatively, you could apply a gift amount in excess of $14,000 against your lifetime generation skipping transfer tax exemption, currently set at $5,250,000. In order to do this, you will have to file IRS Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return. If you need to file this return, you’ll need to hire an accountant to do so, as the rules applying to this kind of transfer are not commonly known to the general public.

For more information on procedures for transferring gifts of Treasury bonds, see Transferring Treasury Bills, Notes, Bonds, and TIPS.

Kevin Mercadante

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids.

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