Series EE Bonds
Also known as savings bonds. Cash equivalents. Paper bonds purchased at 50% of their face amount and range in face value from $50 to $10,000, therefore they may be purchased for as little as $25. Savings bonds continue to accrue interest after the stated maturity date until the Treasury announces discontinuance of the payments, generally after 30 years. The investor may defer payments of any federal income tax until he/she redeems the EE bond or may choose in accrue and pay the interest annually on his/her IRS form 1040. The interest earned on the bond is exempt from state and local income tax and there are special tax benefits available for bonds used in payment of higher educaiton expenses for the taxpayer, his or her spouse, or a dependent of the taxpayer. Fixed rate on issues after 2005.