how a series ee bond works
along with the series i bond the series ee bond is one of the two types of savings bonds issued by the us treasury series ee bonds cannot be bought or sold in the open market and are hence classified as non marketable securities series ee bonds issued after may 2005 are assigned semi annual fixed coupon rates on may 1 and november 1 the rates apply to all issuances for the ensuing six months bonds issued after each date increase in value monthly but interest payments are handed out semiannually series ee bonds are considered ultra safe low risk investments whose interest is typically exempt from state and local taxes however they are subject to federal taxes but only in the year in which the bond matures or is redeemed ee bonds may be purchased by u s citizens official u s residents minors and all u s government employees regardless of their citizenship status special considerationspaper ee bonds were re issued as patriot bonds after the sept 11 2001 terrorist attacks they are identical in every way to the paper series ee bonds except that any paper bonds purchased through a financial institution after dec 10 2001 have the words patriot bond printed on the top half of the bond certificate situated between the social security number ssn and the issue date financial institutions no longer issue series ee bonds in paper form but the paper patriot bonds can still be cashed or converted into electronic bonds series ee bonds don t need to be reissued to correct small typographical errors in names addresses or social security numbers requirements for a series ee bondthere is a 25 minimum investment requirement for ee bonds and each investor may purchase up to 10 000 in these bonds each calendar year furthermore bondholders must hold onto these investments for at least twelve months before they can redeem the bonds those who redeem bonds within five years will be docked three months of accrued interest payments since ee bonds earn interest for up to 30 years the longer they re held the more they re worth paper bonds were issued at a 50 discount to par while bonds electronically sourced through treasurydirect are purchased at face value the latter is still guaranteed to be worth twice their original value at first maturity date after 20 years while paying interest the same way as paper ee bonds 