However, our analysis  of Treasury’s bond data showed that the drop in bond purchases after the  elimination of paper savings bonds was not statistically significant. To  open a TreasuryDirect account, a customer generally must have both  Internet access and a bank account. According to representatives from a  nonprofit organization that focuses on savings for lower-income  households, mobile access is the primary means of Internet access for  some lower-income consumers. Decline in Purchases after the Elimination of Paper Savings Bonds Is Consistent with Long-Term Trends, and Treasury Is Addressing Access and Usability Challenges

Our analyses of Treasury savings bond data indicated that the decline in  savings bond purchases after Treasury discontinued the sale of paper  savings bonds in January 2012 was consistent with the overall long-term  decline in savings bond purchases. For example,  about 55,000 tax filers with adjusted gross incomes of $25,000 or less  participated in the program for tax years 2010 through 2013 and bought  about $13.7 million in savings bonds. Tax Time Savings Bond Program Promotes Savings through the Purchase of Paper Savings Bonds, Including by Lower-Income Households

Since 2010, U.S. tax filers have been able to use their tax refund to  purchase paper savings bonds through the Tax Time Savings Bond  program. As shown in table 1, in tax years  2010 through 2013 about 142,000 total tax filers used the Tax Time  program to buy a total of about $72.5 million in paper savings bonds. In prior work on agency stewardship of public funds, we reported that  properly estimating program costs is necessary for several reasons and  that comparing these costs to the program’s benefits to evaluate  alternatives related to program decisions is a best practice. As discussed, Treasury has previously considered levels of  program participation and amounts of savings bonds purchased by  participants in its decisions, and most recently has extended the program  until a suitable electronic alternative is available. Savings by Lower- Income Households Are Limited but Federal Agencies and Other Entities Have Created Savings Programs

GAO found that lower-income households save relatively small amounts  and face a number of savings challenges that result, in part, from limited  access to financial institutions and products. In addition to their financial literacy efforts, some federal agencies have  developed savings programs involving financial assets. According to a Treasury official, Treasury launched the myRA program,  which is in a soft-launch phase, to promote retirement savings among individuals without access to employer-sponsored retirement plans.According to Treasury, the program offers a retirement savings account  that is a Roth IRA, so it follows the same rules that apply generally to  Roth IRAs and receives the same tax treatment.no minimum-amount requirement, a maximum balance of $15,000, and it  can be funded through payroll direct deposit. U.S.  savings bonds continue to provide Americans, including those with lower- incomes, with an affordable, safe, and convenient way to save and invest. Treasury has taken  steps to develop a more flexible and responsive Internet-based system  than TreasuryDirect, but the TRIM system is in the early stages of  development. However, the TRIM system still will  require Internet access by computer or mobile device, and Tax Time  program users who lack Internet access may not be able to save by  buying savings bonds at tax time if the program is discontinued. How the  benefits and costs of the Tax Time program would compare when  Treasury implements TRIM is not known—in part because Treasury  generally has considered the program’s benefits but not the program’s  costs. Without considering both, Treasury cannot make a fully informed  decision on whether to discontinue the Tax Time program when an  electronic alternative is available. Recommendation for Executive Action

To help ensure that Treasury can make a fully informed decision on  whether to discontinue the Tax Time Savings Bond program as it  implements the TRIM system, GAO recommends that the Secretary of  the Treasury consider the benefits and costs of the Tax Time program in  future decisions on whether to extend the program. Appendix I: Objectives, Scope, and Methodology

Our review examines (1) the effect of Treasury’s elimination of paper U.S.  savings bonds, including on the savings bond program and bond  purchases; (2) the extent to which Treasury’s Tax Time Savings Bond  program has promoted savings, particularly by lower-income households,  and Treasury’s plans for the program’s future; and (3) the extent to which  lower-income households are saving using financial products, and some  of the government and nonprofit programs developed to promote savings  by lower-income households. Third, we  used aggregated data provided by the Internal Revenue Service (IRS) on  income tax filers who used at least part of their tax refunds to buy paper  savings bonds from 2010 through 2013 to analyze the number of tax filers  who bought paper savings bonds, including those with adjusted gross  incomes of $25,000 or below—the lowest income category reported in the  data—and the amount of savings bonds they purchased. We also reviewed select state, local, and nonprofit programs targeting  lower-income households.
Why GAO Did This Study

U.S. savings bonds provide Americans with an affordable way to save. In 2012, Treasury stopped selling paper savings bonds at banks as part of its broader electronic initiative. As a result, savings bonds generally must be purchased through TreasuryDirect®. The one exception is the Tax Time Savings Bond program, established in 2010 to enable taxpayers to use their tax refund to buy paper savings bonds. The program is one way for lower-income families to save.
You requested that GAO examine Treasury's savings bond program, including the accessibility of TreasuryDirect, and other savings programs. This report examines (1) the effect of Treasury's elimination of paper U.S. savings bonds on the program and bond purchases, (2) the extent to which the Tax Time Savings Bond program has promoted savings by lower-income households and Treasury's future plans for the program, and (3) the extent to which lower-income households are saving and programs developed by federal agencies and others. GAO reviewed agency rules and other documents; analyzed Treasury, Internal Revenue Service, and other data, in part using economic models; and interviewed federal, state, and nonprofit entities and experts involved in savings programs.

What GAO Found

The Department of the Treasury's (Treasury) elimination of paper savings bonds made buying bonds more difficult for some customers, but GAO's analyses generally indicated that the decline in bond purchases after the change was not statistically significant. Treasury eliminated paper savings bonds in January 2012, after a long-term decline in savings bond purchases. It estimated the change would save about $70 million in program costs from 2012 through 2016. Except for the Tax Time Savings Bond program, customers who want to buy savings bonds must use TreasuryDirect—an online system that requires users to have Internet access and a bank account. Customers without both, which likely includes lower-income households, face challenges accessing TreasuryDirect. Treasury is in the early stages of developing a new system, the Treasury Retail Investment Manager (TRIM), to make it easier to buy savings bonds, such as by using a mobile device, which often is the primary means of accessing the Internet for many lower-income households.
A little more than one-third of the users of Treasury's Tax Time Savings Bond program—the only way to purchase paper bonds—were lower-income tax filers (filers with an adjusted gross income of $25,000 or less), but the program's future is uncertain. Since 2010, tax filers have been able to use a tax form to buy paper savings bonds with their tax refund. For tax years 2010 through 2013, about 142,000 tax filers (less than 1 percent of tax filers receiving refunds) used at least part of their tax refund to buy nearly $72.5 million in savings bonds. Of these filers, about 55,000 had incomes of $25,000 or less and bought about $13.7 million in savings bonds, or about $250, on average, per filer each year. Treasury has been extending the program partly because the amount of bonds purchased and participation levels indicate that the program is providing benefits, but it generally has not considered the program's costs. In May 2015, Treasury officials told GAO that they plan to continue to extend the program until TRIM can provide a suitable electronic alternative. Because TRIM will require Internet access by computer or mobile device, Tax Time program users without such access may no longer be able to save by buying bonds with their refunds after TRIM is implemented. In prior work on agency stewardship of public funds, GAO reported that agencies, as a best practice, should consider both benefits and costs in considering alternatives related to program decisions. Without considering both, Treasury cannot make a fully informed decision on whether to discontinue the Tax Time program when an electronic alternative is available.
On the basis of GAO's analysis of data from the most recent Survey of Consumer Finances conducted in 2013, the median value of financial assets held by the bottom fifth of income earners (whose median annual income was $14,200) was $550. Given the limited savings of lower-income households and savings challenges faced by such households, a number of federal agencies have developed programs to promote savings. For example, Treasury's my RA®, which is in a soft-launch phase, promotes retirement savings for individuals without access to employer-sponsored retirement plans. State, local, and nonprofit agencies also have initiated programs that promote savings for retirement, child development, or emergencies and generally target lower-income households. Eligibility requirements and participation vary by program.

What GAO Recommends

GAO recommends that as Treasury implements the TRIM system, it consider the benefits and costs of the Tax Time program in future decisions on whether to extend the program. Treasury agreed with GAO's recommendation.