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You don't pay tax on I bonds if they are directed towards educational expenses for you or your child. Compare this with a 529, which serves a similar purpose.

You don't pay tax on I bonds if they are directed towards educational expenses for you or your child. Compare this with a 529, which serves a similar purpose. Then this just reduces to a stocks vs. bonds argument, but for your kid's education. Do you value safety or STONKs then? Also, I find changing beneficiaries for an I bond is easier than a 529, in the event whatever beneficiary doesn't pursue college (a decision I understand more these days), but IANAIA (I am not an investment advisor?)

lotsofpulp 5y ago
That is interesting, thanks for the info! Also, I am not exactly sure what you mean by "STONKs", but if one's investment timeline is on the order of years, all the history I see shows broad market equity index funds to be pretty safe.
chockablock 5y ago
Unlike a 529 plan, the tax benefit of using I-Bonds for tuition is only available if your AGI is under a certain amount in the year you cash them in (currently $154k for a married couple). https://www.investopedia.com/ask/answers/111414/what-education-savings-bond-program.asp https://www.investopedia.com/ask/answers/111414/what-educati...
- ljhsiung 5y ago
  You can rollover the I-Bonds to a 529 to bypass that AGI phaseout. https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan https://www.savingforcollege.com/article/how-to-rollover-us-...
  - chockablock 5y ago
    The same AGI phase-out applies in the year that you do the rollover. So this doesn’t allow you to avoid the income phase-out, it just lets you time-shift the educational spending to an earlier year (in which your income may be below the threshold). If your family income is above the threshold in every year until you need the money for tuition, then there will not be an opportunity to get the tax benefit. From your link, emphasis mine: > Taxpayers can bypass the income phase-outs on savings bonds by rolling them over into a 529 college savings plan before their income increases beyond the income phase-outs.

lotsofpulp 5y ago

That is interesting, thanks for the info! Also, I am not exactly sure what you mean by "STONKs", but if one's investment timeline is on the order of years, all the history I see shows broad market equity index funds to be pretty safe.

chockablock 5y ago

Unlike a 529 plan, the tax benefit of using I-Bonds for tuition is only available if your AGI is under a certain amount in the year you cash them in (currently $154k for a married couple). https://www.investopedia.com/ask/answers/111414/what-education-savings-bond-program.asp https://www.investopedia.com/ask/answers/111414/what-educati...

ljhsiung 5y ago
You can rollover the I-Bonds to a 529 to bypass that AGI phaseout. https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan https://www.savingforcollege.com/article/how-to-rollover-us-...
- chockablock 5y ago
  The same AGI phase-out applies in the year that you do the rollover. So this doesn’t allow you to avoid the income phase-out, it just lets you time-shift the educational spending to an earlier year (in which your income may be below the threshold). If your family income is above the threshold in every year until you need the money for tuition, then there will not be an opportunity to get the tax benefit. From your link, emphasis mine: > Taxpayers can bypass the income phase-outs on savings bonds by rolling them over into a 529 college savings plan before their income increases beyond the income phase-outs.