PSU employees may purchase $100, $200, or $500, $1,000, $5,000 and $10,000 U.S. savings bonds through payroll deduction. A minimum of $5 per pay period must be deducted. Employees may purchase multiple denominations, designate different owners/co-owners and beneficiaries for each bond and specify designated amounts or percentages for each account. The purchase price of the bond is half of the face value. Bonds are issued and begin to earn interest after the full purchase price has been accumulated through payroll deductions.

Employees must complete a Savings Bonds Authorization for Purchase and Request for Change Form to start, change or stop savings bond deductions.

The interest on savings bonds is exempt from state and local income taxes, and federal tax is deferred until the bonds are redeemed or until maturity. The investment accumulates steadily to provide a savings reserve for an employee's future needs.

Bonds purchased prior to May 1, 1997, but after May 1, 1995, earn market based rates from the date of purchase. Bonds purchased prior to May 1, 1995 but after March 1, 1993 and held for six months up to five years from issue earn four percent interest. Bonds held for five to 18 years from issue earn an average market-based rate or four percent, whichever is higher. Bonds can continue to earn interest for 30 years.

On April 30, 1997, the Secretary of the Treasury announced three important changes in the U.S. Savings Bond Program that affect Series EE bonds purchased on or after May 1, 1997. These changes are summarized below:

• Series EE bonds issued on or after May 1, 1997, will earn interest from the date of issue at rates equivalent to 90 percent of 5-year Treasury security yields. The new rates will continue to be announced on May 1 and November 1 of each year.
• Series EE bonds will now increase in value monthly, rather than every six months.
• A 3-month loss of interest will apply to bonds redeemed less than five years from date of issue. This feature is designed to encourage owners to hold their bonds for the longer term. It will not affect bonds held for five or more years.

The new terms will not apply to bonds with issue dates before May 1, 1997.

Contacts

HRS Staff

Forms & Booklets

• Eventually we would like to have these forms and booklets available on-line. For the time being, you can e-mail a request to HRS, and we will send you the information. Make sure to tell us which form or booklet that you need and where you would like it sent.

Other Links & Info

U.S. Treasury