38036 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Parts 317, 321, 330, 359, and

360

Offering and Governing Regulations

for United States Savings Bonds,

Series I; Issuing and Paying Agents;

and Payment Under Special

Endorsement

AGENCY: Bureau of the Public Debt,

Fiscal Service, Department of the

Treasury.

ACTION: Final rule.

SUMMARY: The Department of the

Treasury (‘‘Department’’ or ‘‘Treasury’’)

is publishing in final form new

regulations providing an offering

circular for United States Series I

Savings Bonds, new regulations

governing United States Series I Savings

Bonds, and conforming amendments to

existing regulations governing issuing

and paying agents. The regulations

provide for the public offering of new

Treasury inflation-indexed savings

bonds (‘‘Series I’’) by the Department.

The regulations also set forth the

provisions governing transactions in

inflation-indexed savings bonds. In

addition, this rule makes certain

technical clarifications and conforming

changes.

EFFECTIVE DATE: September 1, 1998.

ADDRESSES: Copies of this final rule are

available for downloading from the

Bureau of the Public Debt at the

following World Wide Web address:

<http://www.savingsbonds.gov> or may

be obtained from the Bureau of the

Public Debt, Division of Staff Services,

200 3rd St., Parkersburg, WV 26106–

1328.

FOR FURTHER INFORMATION CONTACT:

Wallace L. Earnest, Director, Division of

Staff Services, at (304)480–6319 or by email at <wearnest@bpd.treas.gov>;

Edward C. Gronseth, Deputy Chief

Counsel, at (304)480–5192 or by e-mail

at <egronset@bpd.treas.gov>; or Dean A.

Adams, Assistant Chief Counsel, Office

of the Chief Counsel, at (304)480–5192

or by e-mail at

<dadams@bpd.treas.gov>.

SUPPLEMENTARY INFORMATION:

I. Background

31 CFR Part 359, referred to as the

offering circular, sets out the terms and

conditions for the sale and issuance of

United States Savings Bonds, Series I,

by the Department of the Treasury to the

public. 31 CFR Part 360, referred to as

the governing regulations, sets out the

terms and conditions governing

transactions in United States Savings

Bonds, Series I. Together, the offering

circular and governing regulations

represent comprehensive and exclusive

statements of those terms and

conditions.

The regulations in 31 CFR part 317

(also referred to as Department of the

Treasury Circular, Public Debt Series

No. 4–67, Second Revision, as

amended), 31 CFR part 321 (also

referred to as Department of the

Treasury Circular No. 750, Fourth

Revision, as amended), and 31 CFR Part

330 (also referred to as Department of

the Treasury Circular No. 888, Fifth

Revision, as amended), are being

amended to incorporate changes relating

to Series I.

The Department has decided to offer

a new type of savings bond, referred to

as an inflation-indexed or Series I

savings bond, whose rate will be

adjusted for inflation as described

below. The Department believes the

issuance of these new inflation-indexed

savings bonds will reduce borrowing

costs to the Treasury over the long term,

will broaden the types of debt

instruments available to investors, and

will make available to all investors a

security whose value is tied generally to

changes in inflation. This new series of

savings bonds contains terms relating to

the use of the U.S. City Average All

Items Consumer Price Index for All

Urban Consumers (‘‘CPI-U’’), published

by the Bureau of Labor Statistics

(‘‘BLS’’) to measure inflation, that

potential investors should review

closely.

Because these savings bonds contain terms

different from savings bonds previously

issued by the Department, the interested

investor is urged to read ‘‘Investment

Considerations’’ set forth in the ‘‘Summary of

Significant Features’’, Paragraph (24), and

§ 359.3.

II. Summary of Significant Features

Offering Regulations (31 CFR part

359), Governing Regulations (31 CFR

part 360)

(1) Availability (§ 359.0)

The public will be able to purchase

Series I bonds over-the-counter at many

financial institutions and through

employers who choose to offer Series I

bonds through payroll savings plans.

(2) Denominations (§ 359.2(b))

Series I bonds will be offered at par

value in denominations of $50, $75,

$100, $200, $500, $1,000, $5,000, and

$10,000. Issuance of Series I bonds at

par value is different from Series EE

bonds, which are issued at a 50%

discount to par value (or face amount).

Thus, it will cost $50 to purchase a $50

Series I bond, and $25 for a $50 Series

EE bond.

(3) Purchase Limitation (§ 359.5)

The amount of Series I bonds which

may be purchased in the name of any

one person, in any one year, is limited

to $30,000 (par value) per social security

account number.

(4) Transferability (§§ 360.15, 360.16)

Series I bonds will not be transferable,

negotiable, or available for pledge or use

as collateral, except as specifically

provided in the regulations.

(5) Exchange

Series I bonds will not be available for

exchange for other series of savings

bonds.

(6) Rate Announcements

(§ 359.2(e)(1)(i))

Rates applicable to Series I bonds will

be set forth in rate announcements

published each May and November. If

the regularly scheduled date for the

announcement (for example, May 1) is

a day when the Treasury is not open for

business, then the announcement will

be made on the next business day;

however, the effective date of the rates

will remain the first day of the month

of the announcement.

(7) Fixed Rate of Return

(§ 359.2(e)(1)(i),(ii))

The Secretary of the Treasury shall

determine fixed rates of return for Series

I savings bonds. The Department’s rate

announcements effective each May 1

and November 1 will reflect the

Secretary’s determination of the fixed

rate of return for bonds purchased

during the six-month period beginning

with the effective date of the

announcement. For example, a fixed

rate reflected in the May 1, 1999,

announcement will apply to any Series

I bond purchased in the period May

through October 1999. The fixed rate of

return applicable at the time a Series I

bond is issued will apply to such bond

throughout its 30-year life. Accordingly,

the Department’s rate announcements

each May and November will not affect

the fixed rates established for bonds

previously issued.

(8) Semiannual Inflation Rate

(§ 359.2(e)(1)(iii))

Each May and November, Treasury

will announce a variable semiannual

inflation rate for inflation-indexed

savings bonds. The index used to

determine this rate will be the nonseasonally adjusted U.S. City Average

All Items Consumer Price Index for All
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38037

Urban Consumers (‘‘CPI–U’’) published

by the Bureau of Labor Statistics

(‘‘BLS’’) of the U.S. Department of

Labor. (§ 359.3 of the Series I offering

regulations sets forth index

contingencies for determining an

inflation component if the CPI–U is not

available.) More specifically, the rate

will reflect the percentage change in the

CPI–U during the six-month period

ending each March and September. For

example, the semiannual inflation rate

to be announced May 1, 1999, will

reflect the change in the index over the

period October 1998 through March

1999. The semiannual inflation rate will

be reflected in a Series I bond’s value

beginning on that bond’s next

semiannual interest period following

the announcement. For a complete

discussion of this lag feature, see

paragraph (24)(b) below.

The rate of change over the six-month

period will be expressed as a

percentage, rounded to the nearest one

hundredth of one percent. More

specifically, using the above example,

the semiannual inflation rate will equal

the CPI–U value for the most recent

March less the value for the preceding

September with that difference then

being divided by the CPI–U value for

the preceding September and the result

being multiplied by 100 to convert the

rate to a percentage. The resulting rate

will be rounded to the nearest onehundredth of one percent. The

semiannual inflation rate to be effective

with the November announcement,

reflecting the change in the CPI–U for

the six-month period ending with the

immediately preceding September, will

be similarly determined. In deflationary

conditions, the semiannual inflation

rate may be negative to such an extent

that it offsets or exceeds the fixed rate

of return; however, the redemption

value of a Series I bond for any

particular month of payment will not be

less than the value for the preceding

payment month.

(9) Composite Rate (§ 359.2(e)(1)(v))

Series I bonds will accrue earnings

based on both a fixed rate of return and

the semiannual inflation rate. A single

annual rate will be constructed to reflect

the combined effects of the fixed rate of

return and the semiannual inflation rate.

The following formula demonstrates

how the composite rate will be

determined.

The fixed rate of return, FR, and the

semiannual inflation rate, SIR, will be

divided by 100 to remove the percentage

format and then combined into a

composite annual rate, CR, in

accordance with the following formula:

CR = {SIR + (FR ÷ 2) + [SIR × (FR ÷ 2)]}

× 2

The resulting annual rate will be

converted to a percentage and rounded

to the nearest one hundredth of one

percent. The composite rates will be

announced by Treasury each May and

November, and will be derived from the

semiannual inflation rate announced on

the same date and the fixed rates of

return applicable to Series I savings

bonds.

(10) Deflation (§ 359.2(e)(1)(iii))

Negative as well as positive changes

in the CPI–U will be used to calculate

composite rates. In the event of

deflation, the negative change in the

CPI–U will reduce the composite rate. If

deflation is such that it more than fully

offsets the fixed rate of return and

produces a negative composite rate, the

composite rate will not be reduced

below zero, i.e., the redemption value of

the bond will remain constant through

the period and become the base for

calculating earnings that may apply

during the subsequent period.

(11) Base Denomination

(§ 359.2(e)(1)(vi))

All value calculations are performed

on a hypothetical denomination of $25

having a value at the beginning of the

first semiannual rate period equal to the

issue price of $25. The hypothetical

denomination of $25 is used because all

Series I bond denominations are

divisible by $25. Redemption values for

bonds of greater denominations are in

direct proportion according to the ratio

of denominations. For example, if the

value of a hypothetical $25

denomination is $41.20—i.e., $25.00

issue price plus $16.20 accrued

interest—on the same redemption date,

the value of a $50 bond bearing the

same issue date is $41.20 × (50/25) or

$82.40.

(12) Issue Date (§ 359.2(e)(1)(vii))

The issue date of a Series I bond is the

first day of the month in which payment

of the issue price is received by an

authorized issuing agent. Thus, if an

authorized issuing agent receives the

issue price on the 20th of a month, the

issue date is the first of the month.

(13) Redemption Value

(§ 359.2(e)(1)(viii))

The redemption value of a bond is

that amount that will be paid when the

bond is redeemed.

(14) Accrual Date (§ 359.2(e)(1)(ix))

Earnings on a Series I bond, if any,

accrue on the first day of each month.

The redemption value of a bond does

not change between accrual dates.

(15) Semiannual Rate Periods

(§ 359.2(e)(1)(x))

Semiannual rate periods are the sixmonth periods beginning on the date of

issue and on each semiannual

anniversary of the date of issue to

maturity.

(16) Maturity (§ 359.2 (c),(e)(1)(xi))

Series I bonds have a maturity period

of 30 years, consisting of an original

maturity period of 20 years and an

automatic extension period of 10 years.

The bonds have an interest paying life

of 30 years after date of issue and cease

to increase in value as of that date.

(17) Interest Rates and Monthly

Accruals (§ 359.2(e)(2),(4))

Series I composite rates apply to

earnings during the first semiannual rate

period beginning on or after the

effective date of the rate. Interest, at the

composite rate from the beginning of the

initial semiannual rate period, accrues

according to the formula specified in

§ 359.2(e)(4)(ii). The following table

shows, for any given month of issue

with composite rates announced each

May and November, the months making

up the semiannual rate period during

which interest is earned at the

composite rate specified in the

announcement.

Month of issuance Semiannual rate

period (1) begins

Announcement date of composite

rate that applies during rate period

(1)

Semiannual rate

period (2) begins

Announcement date of composite

rate that applies during rate period

(2)

January .................... January 1 ............... November 1 (announced 2 months

prior to beginning of semiannual

rate period).

July 1 ..................... May 1 (announced 2 months prior to

beginning of semiannual rate period).

February .................. February 1 ............. November 1 (announced 3 months

prior to beginning of semiannual

rate period).

August 1 ................ May 1 (announced 3 months prior to

beginning of semiannual rate period).
38038 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

Month of issuance Semiannual rate

period (1) begins

Announcement date of composite

rate that applies during rate period

(1)

Semiannual rate

period (2) begins

Announcement date of composite

rate that applies during rate period

(2)

March ....................... March 1 .................. November 1 (announced 4 months

prior to beginning of semiannual

rate period).

September 1 .......... May 1 (announced 4 months prior to

beginning of semiannual rate period).

April ......................... April 1 .................... November 1 (announced 5 months

prior to beginning of semiannual

rate period).

October 1 ............... May 1 (announced 5 months prior to

beginning of semiannual rate period).

May .......................... May 1 ..................... May 1 ................................................. November 1 ........... November 1.

June ......................... June 1 .................... May 1 (announced 1 month prior to

beginning of semiannual rate period).

December 1 ........... November 1 (announced 1 month

prior to beginning of semiannual

rate period).

July .......................... July 1 ..................... May 1 (announced 2 months prior to

beginning of semiannual rate period).

January 1 ............... November 1 (announced 2 months

prior to beginning of semiannual

rate period).

August ..................... August 1 ................ May 1 (announced 3 months prior to

beginning of semiannual rate period).

February 1 ............. November 1 (announced 3 months

prior to beginning of semiannual

rate period).

September ............... September 1 .......... May 1 (announced 4 months prior to

beginning of semiannual rate period).

March 1 .................. November 1 (announced 4 months

prior to beginning of semiannual

rate period).

October .................... October 1 ............... May 1 (announced 5 months prior to

beginning of semiannual rate period).

April 1 .................... November 1 (announced 5 months

prior to beginning of semiannual

rate period).

November ................ November 1 ........... November 1 ....................................... May 1 ..................... May 1.

December ................ December 1 ........... November 1 (announced 1 month

prior to beginning of semiannual

rate period).

June 1 .................... May 1 (announced 1 month prior to

beginning of semiannual rate period).

Notes: Notwithstanding any consideration of interest penalty for early redemption, interest earned during each month of a semiannual rate period accrues according to the formula specified in § 359.2(e)(4)(ii). Also, if the regularly scheduled date for a composite rate announcement is a

day that Treasury is not open for business, the announcement will be made on the next business day; however, the effective date of the rate will

be the first day of the month of the announcement.

See also the discussion of inflation lag

in paragraph (24)(b) below.

(18) Redemption (§ 359.2(d))

A Series I bond may be redeemed

beginning six months after its issue date

or at any time thereafter. The Secretary

of the Treasury may not call a Series I

bond for redemption prior to an original

maturity period of 20 years and an

automatic extension period of 10 years,

for a total period of 30 years from its

issue date.

(19) Interest Penalty (§ 359.2(e)(3))

A Series I bond may be redeemed

beginning six months after issuance,

although a bond redeemed less than five

years from the date of issue will be

subject to a three-month interest

penalty. If a Series I bond is redeemed

less than five years following the date of

issue, the overall earning period from

the date of issue to the date of

redemption will be reduced by three

months. For example, if a bond issued

on January 1, 1999, is redeemed nine

months later on October 1, 1999, the

redemption value will be determined by

applying the value calculation

procedures described in § 359.2(e)(4)

and the Series I bond composite rate for

that bond as if the redemption date were

three months earlier (July 1, 1999). The

redemption value of a bond subject to

the three-month interest penalty will

not be reduced below the issue price.

This penalty does not apply to bonds

redeemed five years or more after the

date of issue. For a discussion of interest

penalty, see paragraph (24)(d) below.

(20) Redemption Value Calculations

(§ 359.2(e)(4))

Interest on a bond accrues and

becomes part of the redemption value

which is paid when the bond is

surrendered for payment. The

redemption value of a bond for the

accrual date (the first day of each

month) is determined in accordance

with § 359.2(e)(4). Redemption value

calculations will provide for monthly

increases in bond values, with all values

calculated using the formula in

§ 359.2(e)(4), and will take into account

a three-month loss of earnings for bonds

held less than five years from date of

issue.

(21) The Secretary’s Determination

(§ 359.2(e)(5))

The determination by the Secretary of

the Treasury, or the Secretary’s

designee, of fixed rates of return,

semiannual inflation rates, composite

rates, and savings bond redemption

values shall be final and conclusive.

(22) Tables of Redemption Values

(§ 359.2(e)(6))

Tables of redemption values are made

available in various formats and media,

including on the Internet, by the Bureau

of the Public Debt, Parkersburg, West

Virginia 26106–1328. Treasury reserves

the right to cease making the tables of

redemption values available in any of

these formats or media. Redemption

values published in such tables reflect

the three-month interest penalty applied

to bonds redeemed prior to five years

from the date of issue.

(23) Taxation (§§ 359.9, 359.10)

The increase in value, represented by

the difference between the face or par

amount of a Series I bond and the

redemption value received for it, is

interest. Thus, earnings produced by the

composite rate (which consists of both

the fixed rate and the semiannual

inflation rate) are treated as interest.

Interest earned on Series I bonds is

exempt from State and local income

taxes. Series I bond interest will be

included on Federal tax returns in the

same way as Series EE bonds. In

general, owners may defer reporting the

increment for Federal income tax

purposes until: (i) they redeem the

bonds, (ii) the bonds cease earning

interest after 30 years, or (iii) are

otherwise disposed of, whichever is
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38039

earlier. However, an owner may elect to

accrue the increment each year it is

earned. Thus, if an investor takes no

action, the gain is deferred until the first

of the three events described above

occurs. Only if an investor affirmatively

acts by making such an election will the

increase in value be includable in

income annually. The current special

tax benefits available for education

savings with EE bonds purchased after

1989 will apply to Series I bonds. If a

taxpayer qualifies under current rules

and the bonds are redeemed to pay for

post-secondary tuition and fees, he or

she can exclude all or part of the

interest (the difference between the

redemption value and face value)

earned on Series I bonds from income

for that tax year. Authoritative

information about the Education

Savings Bond Program can be found in

Internal Revenue Service Publication

17, ‘‘Your Federal Income Tax’’, and

Publication 550, ‘‘Investment Income

and Expenses.’’

(24) Investment Considerations

(§§ 359.2, 359.3)

(a) Index Contingencies (§ 359.3(a))

This section clarifies the Treasury’s

course of action if the CPI is:

discontinued, or, in the judgment of the

Secretary, either fundamentally altered

in a manner materially adverse to the

interests of an investor in the savings

bond or altered by legislation or

Executive Order in a manner materially

adverse to the interests of an investor in

the savings bond.

A change to the CPI would be

considered fundamental if it affected the

character of the CPI. Technical changes

made by the BLS to the CPI to improve

its accuracy as a measure of the cost of

living would not be considered

fundamental changes. Technical

changes include, but are not limited to:

(1) The specific items (e.g., apples or

major appliances) to be priced for the

index; (2) the way individual price

quotations are aggregated to construct

component price indices for these items

(aggregation of item sub-strata); (3) the

method for combining these component

price indices to obtain the

comprehensive, all-items CPI

(aggregation of item strata); and (4) the

procedures for incorporating new goods

into the index and making adjustments

for quality changes in existing goods.

Technical changes to the CPI

previously made or announced by BLS

include introducing probability

sampling to select the precise items for

which prices are collected and the

stores in which collection takes place,

and changing the way in which price

movements of major components, such

as shelter costs for homeowners in the

early 1980s and medical care costs

beginning in 1997, are measured.

The Advisory Commission to Study

the Consumer Price Index (the Boskin

Commission) made a number of

recommendations to improve the

calculation of changes in the cost of

living. Some of these recommendations

were directed to BLS and were designed

to improve the calculation of the

monthly CPI. These recommendations,

if and to the extent implemented by

BLS, would constitute technical changes

rather than fundamental changes.

The Boskin Commission also

recommended construction of an annual

measure of the cost of living as a

supplement to the monthly CPI.

Development and use of such a

supplement, by itself, would not change

the monthly CPI itself. While the Boskin

Commission did not suggest that such a

measure replace the CPI, a decision by

BLS to replace, rather than supplement,

the current monthly CPI with an annual

measure of consumer prices, would

constitute a fundamental change.

In addition, if the Secretary

determines that the CPI is altered by

legislation or Executive Order in a

manner that is materially adverse to the

interests of an investor in the savings

bond, the Secretary would propose an

alternative index.

If the CPI for a particular month is not

reported by the last day of the following

month, the last CPI that has been

reported (including any revision of a

previously reported CPI number) will be

used to calculate CPI numbers for

months for which the CPI has not been

reported for such day.

(b) Inflation Lag (§ 359.3(b))

The inflation rate component of

investor earnings will be determined

twice each year. This rate will be the

percentage change in the CPI–U for the

six months ending each March and

September. The rate will be included in

the composite rate that is announced

each May and November. Each

composite rate will be effective for the

entirety of all semiannual rate periods

that begin while the rate is in effect.

Thus, notwithstanding any interest

penalty, an inflation rate may affect

interest accruals from 3 to 13 months

from the date that the CPI–U is

measured.

For example, the inflation rate

determined from the CPI–U for the sixmonth period from October 1, 2003,

through March 31, 2004, will be

included in the composite rate

announced on May 1, 2004. For a bond

purchased in May 1999, this rate will go

into effect immediately with the new

semiannual rate period for this bond

beginning on May 1, 2004. Series I

bonds issued in May begin new

semiannual rate periods in the months

of May and November. In this example,

the inflation rate will have its earliest

impact in June 2004, when interest from

May accrues, three months after the end

of the six-month CPI–U period that

ended March 31, 2004.

As another example, the May 1, 2004,

rate will apply similarly to a bond

purchased in October 1999. Series I

bonds issued in October begin new

semiannual rate periods in the months

of April and October. Thus, for this

bond, the May 1, 2004, composite rate

(which includes the fixed rate

applicable when the bond was

purchased in October 1999 and the

inflation rate announced on May 1,

2004) will not go into effect until a new

semiannual rate period starts on October

1, 2004. This rate, therefore, will

determine the inflation-indexed portion

of each interest accrual from November

2004 through April 2005. In this

example, the inflation rate will have its

latest impact in April 2005, 13 months

after the end of the six-month CPI–U

period that ended March 31, 2004.

(c) Liquidity (§ 359.2(d), (e)(3))

A Series I bond may not be redeemed

until six months after its issue date.

However, a bond redeemed less than

five years from the date of issue will be

subject to a three-month interest

penalty.

(d) Early Redemption Penalty

(§ 359.2(e)(3))

If a Series I bond is redeemed less

than five years following the date of

issue, the overall earning period from

the date of issue will be reduced by

three months. For example, if a bond

issued January 1, 1999, is redeemed

nine months later on October 1, 1999,

the redemption value will be

determined by applying the value

calculation procedures described in

§ 359.2(e)(4) and the Series I bond

composite rate for that bond as if the

redemption date were three months

earlier (July 1, 1999). The redemption

value of a bond subject to the threemonth interest penalty shall not be

reduced below the issue price. This

penalty does not apply to bonds

redeemed five years or more after the

date of issue.

III. Section-by-Section Summary

This final rule provides for the sale

and issuance of, and the governing of

transactions in, Series I savings bonds.

This rule also amends Parts 317, 321
38040 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

and 330, relating to issuing and paying

agents of savings bonds, to incorporate

changes to accommodate the processing

of Series I savings bonds. The

regulations also contain changes

designed to reduce operating costs and

provide for increased efficiency,

without any reduction in the level of

service to bondowners and financial

institutions serving as financial agents.

Part 359, Offering of United States

Savings Bonds, Series I

(1) Section 359.0 provides that the

offering for sale of Series I savings

bonds is effective September 1, 1998.

(2) Section 359.1 cross-references the

regulations governing transactions in

Series I savings bonds.

(3) Section 359.2 describes Series I

savings bonds in terms of

denominations, issue prices, maturity

period, redemption features,

determination of the composite rate, and

redemption value calculations.

(4) Section 359.3 describes investment

considerations, to include CPI index

contingencies, the inflation lag factor,

liquidity, and the early redemption

penalty.

(5) Section 359.4 sets out general

provisions regarding the registration and

issuance of Series I savings bonds.

(6) Section 359.5 sets the limitation

on annual purchases at $30,000 issue

price per person determined by social

security account number.

(7) Section 359.6 provides for the

purchase of Series I savings bonds

through payroll plans, over-the-counter/

mail, bond-a-month plans, and various

employee plans.

(8) Section 359.7 describes mail

deliveries of Series I savings bonds.

(9) Section 359.8 sets out general

provisions for the payment or

redemption of Series I savings bonds by

financial institutions and Federal

Reserve Banks and Branches.

(10) Section 359.9 sets out various

provisions regarding the taxation of

Series I savings bonds.

(11) Section 359.10 briefly describes

the education savings bond program

feature of Series I savings bonds.

(12) Section 359.11 authorizes the

Commissioner of the Public Debt to

convert definitive Series I savings bonds

to book-entry.

(13) Section 359.12 authorizes the

Commissioner of the Public Debt to

refuse to issue Series I savings bonds

under certain circumstances.

(14) Section 359.13 authorizes the

Commissioner of the Public Debt to

waive or modify any provision of these

regulations if certain conditions are met.

(15) Section 359.14 sets out the

Federal Reserve Banks and Branches

that provide savings bond services in

the various geographic areas.

(16) Section 359.15 describes the

Secretary of the Treasury’s authority to

supplement or amend this offering at

any time.

Part 360, Regulations Governing United

States Savings Bonds, Series I

(17) Section 360.0 provides that these

regulations govern transactions in Series

I savings bonds.

(18) Section 360.1 sets out the Federal

Reserve Banks and Branches that

process savings bond transactions in the

various geographic areas.

(19) Section 360.2 contains the

specific definitions of terms used in the

governing regulations.

(20) Section 360.5 provides that the

registration of a Series I savings bond is

conclusive of ownership. It also sets out

registration forms and gift bond

inscriptions.

(21) Section 360.6 describes the

authorized forms of registration,

including single ownership,

coownership, and beneficiary.

(22) Section 360.7 provides that the

issuance of Series I savings bonds in a

chain letter or pyramid scheme is

prohibited.

(23) Section 360.10 specifies the

annual purchase limitations for

individuals and employee plans.

(24) Section 360.11 sets out the

computation of purchase amounts by

taxpayer identifying number.

(25) Section 360.12 provides for the

adjustment of excess purchases.

(26) Section 360.13 sets out

conditions of eligibility for various

employee plans.

(27) Section 360.15 provides that

Series I savings bonds are nontransferable and are only payable to the

owners named on the bonds.

(28) Section 360.16 provides that

Series I savings bonds may not be

pledged or used as security for the

performance of an obligation.

(29) Section 360.20 sets out

restrictions on the recognition of

judicial proceedings pertaining to Series

I savings bonds.

(30) Section 360.21 sets out the

procedures for making payment to

judgment creditors.

(31) Section 360.22 provides for

payment or reissue pursuant to divorce.

(32) Section 360.23 sets out the

evidence necessary to establish the

validity of judicial proceedings.

(33) Section 360.24 provides for

payment procedures pursuant to

judicial or administrative forfeiture.

(34) Section 360.25 provides for the

recognition of claims for lost, stolen, or

destroyed bonds.

(35) Section 360.26 sets out the claims

procedures after an investor has

received a bond.

(36) Section 360.27 sets out the claims

procedures when an investor has not

received a bond.

(37) Section 360.28 provides for the

recovery of bonds. A bond for which

relief has been granted is the property

of the United States.

(38) Section 360.29 provides for the

handling of claims filed 10 years after

payment of the bond or 10 years after

maturity.

(39) Section 360.35 sets out general

provisions for the payment of Series I

savings bonds.

(40) Section 360.36 provides for

payment during an owner’s lifetime.

(41) Section 360.37 provides for

payment to either coowner.

(42) Section 360.38 provides for

payment to the registered owner of a

bond on which a beneficiary is named.

(43) Section 360.39 sets out general

procedures for the surrender of Series I

savings bonds for payment.

(44) Section 360.40 sets out special

provisions for the payment of Series I

savings bonds.

(45) Section 360.41 provides for

partial redemption of a Series I savings

bond.

(46) Section 360.42 provides that

notice should be given to the paying

agency if the payment remittance is not

received or has been lost.

(47) Section 360.43 establishes the

date upon which the rights of the parties

are fixed for the purpose of payment.

(48) Section 360.44 provides for the

withdrawal of a request for payment by

an owner, coowner, or legal

representative.

(49) Section 360.45 sets out the

conditions for reissue.

(50) Section 360.46 establishes the

date upon which the rights of the parties

are fixed for the purpose of reissue.

(51) Section 360.47 provides for

reissue under limited circumstances, to

include divorce.

(52) Section 360.48 provides that

reissue may not be made solely to

change denominations or eliminate the

United States Treasury as coowner.

(53) Section 360.49 provides that

reissue may be made to correct an error

in registration.

(54) Section 360.50 provides that

reissue may be made pursuant to a legal

change of name.

(55) Section 360.51 provides that,

under certain specified circumstances, a

request for reissue of a coowner bond

must be made by both coowners, while

a bond registered in beneficiary form

may be reissued at the request of the

owner without the consent of the

beneficiary.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38041

(56) Section 360.55 sets out who is

authorized to certify a request for

payment, reissue or a signature to a

Public Debt form.

(57) Section 360.56 provides general

instructions and sets out the liability of

certifying officers.

(58) Section 360.57 explains when a

certifying officer may not certify

requests.

(59) Section 360.58 specifies when

forms are to be certified.

(60) Section 360.60 provides for

payment to the representative of the

estate of an owner who is a minor or

incompetent.

(61) Section 360.61 provides for

payment to the representative after the

ward has died.

(62) Section 360.62 provides for

payment to a minor.

(63) Section 360.63 provides for

payment to a parent or other person on

behalf of a minor.

(64) Section 360.64 provides for

payment to or the reinvestment of bonds

by a voluntary guardian on behalf of an

owner incapable of making the request,

and for whom no legal representative

has been appointed.

(65) Section 360.65 specifies the

conditions under which a bond owned

by a minor or person under legal

disability may be reissued.

(66) Section 360.70 sets out the rules

governing entitlement for single owner,

coowner, and beneficiary bonds, upon

the death of one or both of the

registrants, without the bond having

been surrendered for payment or

reissue.

(67) Section 360.71 provides for the

payment or reissue of bonds to the legal

representative of a deceased

bondowner’s estate.

(68) Section 360.72 sets out

procedures for the payment or reissue of

bonds that are the property of a

decedent’s estate.

(69) Section 360.75 provides for

payment or reissue during the existence

of a fiduciary estate.

(70) Section 360.76 provides for

payment or reissue after termination of

a fiduciary estate.

(71) Section 360.90 authorizes the

Commissioner of the Public Debt to

waive or modify any provision of the

regulations if certain conditions are met.

(72) Section 360.91 provides that the

Commissioner of the Public Debt may

require additional evidence or a bond of

indemnity as he deems necessary for the

protection of the United States.

(73) Section 360.92 sets out the

Secretary of the Treasury’s authority to

supplement or amend the Series I

savings bond regulations at any time.

IV. Procedural Requirements

This final rule does not meet the

criteria for a ‘‘significant regulatory

action’’ pursuant to Executive Order

12866. Therefore, the regulatory review

procedures contained therein do not

apply.

This final rule relates to matters of

public contract and procedures for U.S.

securities. The notice and public

procedures requirements of the

Administrative Procedure Act are

inapplicable, pursuant to 5 U.S.C.

553(a)(2).

Since no notice of proposed

rulemaking is required, the provisions

of the Regulatory Flexibility Act (5

U.S.C. 601, et seq.) do not apply.

There is no new collection of

information contained in this final rule,

and, therefore, the Paperwork Reduction

Act (44 U.S.C. 3507) does not apply.

List of Subjects

31 CFR Parts 317, 321, 330

Banks, banking, Bonds.

31 CFR Parts 359 and 360

Bonds, Federal Reserve System,

Government securities, Securities.

Dated: July 8, 1998.

Donald V. Hammond,

Acting Fiscal Assistant Secretary.

For the reasons set forth in the

preamble, 31 CFR Chapter II,

Subchapter B, is amended as follows:

PART 317—REGULATIONS

GOVERNING AGENCIES FOR ISSUE

OF UNITED STATES SAVINGS BONDS

1. The authority citation for part 317

is revised to read as follows:

Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12

U.S.C. 391; 31 U.S.C. 3105.

2. Section 317.0 is revised to read as

follows:

§ 317.0 Purpose and effective date.

The regulations in this part govern the

manner in which an organization may

qualify and act as an agent for the sale

and issue of Series EE and Series I

United States Savings Bonds.

3. In § 317.1, paragraph (d) is revised

to read as follows:

§ 317.1 Definitions

* * * * *

(d) Offering circular refers to

Department of the Treasury Circular,

Public Debt Series No. 1–80, current

revision, for Series EE savings bonds,

and to Department of the Treasury

Circular, Public Debt Series No. 1–98 for

Series I bonds.

* * * * *

§ 317.8 [Amended]

4. Subpart A, Paragraph 1 of the

Appendix to § 317.8 is revised to read

as follows:

Appendix to § 317.8—Remittance of

Sales Proceeds and Registration

Records, Department of the Treasury

Circular, Public Debt Series No. 4–67,

Second Revision (31 CFR Part 317)

Fiscal Service, Bureau of the Public

Debt

Subpart A—General Information

1. Purpose. This appendix is issued for the

guidance of organizations qualified as issuing

agents of Series EE and I United States

Savings Bonds under the provisions of

Department of the Treasury Circular, Public

Debt Series No. 4–67, current revision. Its

purpose is to supplement the provisions of

§ 317.8 of the Circular relating to the

remittance of savings bond sales proceeds

and registration records, including the

interest charge to be collected for late

remittances.

* * * * *

5. Subpart D, Paragraph 1. of the

Appendix to § 317.8 is revised to read

as follows:

* * * * *

Subpart D—Interest on Late Remittances

1. Rate of Interest. Interest will be assessed

for each day’s delay in the remittance of sales

proceeds, based on the actual date of

remittance. The rate of interest to be used

will be the current value of funds to the

Department of the Treasury, as set forth each

quarter in the Treasury Financial Manual.

The rate applied will be that in effect during

the entire period in which the remittance is

late. The interest assessment will be collected

by the designated Federal Reserve Bank.

* * * * *

6. Section 317.9 is amended by

removing paragraph (b)(2), by

redesignating paragraph (b)(1) as

paragraph (b), and by revising the entry

for the Federal Reserve Bank of

Minneapolis in the table in newly

designated paragraph (b) to read as

follows:

§ 317.9 Role of the Federal Reserve Banks.

* * * * *

(b) * * *

Servicing officeReserve districts servedGeographic

area served

* * * * *

Federal Reserve Bank

of Minneapolis,

90 Hennepin Avenue,

Minneapolis

MN 55401.

Minneapolis,

Chicago.

IA, IL (northern half),

IN (northern half),

MI, MN,

MT, ND,

SD, WI.
38042 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

Servicing officeReserve districts servedGeographic

area served

* * * * *

PART 321—PAYMENTS BY BANKS

AND OTHER FINANCIAL

INSTITUTIONS OF UNITED STATES

SAVINGS BONDS AND UNITED

STATES SAVINGS NOTES (FREEDOM

SHARES)

7. The authority citation for part 321

is revised to read as follows:

Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12

U.S.C. 391; 31 U.S.C. 3105, 3126.

8. In § 321.0, paragraphs (a) and (b)

are revised to read as follows:

§ 321.0 Purpose

* * * * *

(a) United States Savings Bonds of

Series A, B, C, D, E, EE, and I, and

United States Savings Notes (Freedom

Shares), presented for cash payment;

and

(b) Eligible Series E and EE savings

bonds and savings notes presented for

redemption in exchange for Series HH

savings bonds under the provisions of

Department of the Treasury Circular,

Public Debt Series No. 2–80 (31 CFR

part 352).

9. In § 321.1, paragraph (o) is revised

to read as follows:

§ 321.1 Definitions.

* * * * *

(o) Security means a United States

Savings Bond of Series A, B, C, D, E, EE,

or I and/or a United States Savings Note

(Freedom Share).

* * * * *

10. In § 321.3, paragraph (c) is revised

to read as follows:

§ 321.3 Procedure for qualifying and

serving as paying agent.

* * * * *

(c) Announcement of authority. Upon

receipt of a certificate of qualification

from a Federal Reserve Bank referred to

in § 321.25, a financial institution may

announce or advertise its authority to

redeem eligible securities for cash and

to process eligible Series E and EE

savings bonds and savings notes

presented for redemption in exchange

for Series HH savings bonds under the

provisions of Department of the

Treasury Circular, Public Debt Series

No. 2–80 (31 CFR part 352).

* * * * *

11. Section 321.6 is revised to read as

follows:

§ 321.6 General.

Securities are issued only in

registered form (subject to 31 CFR

359.11), are not transferable, may not be

hypothecated or used as collateral for a

loan, and, except as otherwise

specifically provided in the governing

regulations and this part, are payable to

the owner or coowner named on the

security. The regulations governing

Series EE and HH bonds are contained

in Department of the Treasury Circular,

Public Debt Series No. 3–80, current

revision (31 CFR part 353); those

governing Series I bonds are contained

in Department of the Treasury Circular,

Public Debt Series No. 2–98 (31 CFR

part 360); and, those governing all other

series of U.S. savings securities are

contained in Department of the Treasury

Circular No. 530, current revision (31

CFR part 315).

12. In § 321.7, paragraphs (a) and (g)

are revised to read as follows:

§ 321.7 Authorized cash payments.

(a) General. Subject to the terms and

conditions appearing on the securities,

the governing regulations, and the

provisions of this part, and any

instructions issued in connection

therewith, an agent may make payment

of savings bonds of Series A, B, C, D, E,

EE, and I, and savings notes, presented

for cash redemption. Except as provided

in paragraphs (b) through (d), and (f) of

this section, the securities must be

presented by an individual whose name

is inscribed on the securities as owner

or coowner, and who is known to the

agent, or who can establish his or her

identity in accordance with Treasury

instructions and guidelines (See

§ 321.11(b)).

* * * * *

(g) Interest reporting. A paying agent

is required to report interest in the

amount of $10 or more, paid as part of

the redemption value of securities, to

the payee and to the Internal Revenue

Service, in accordance with 26 CFR

1.6049–4. (See Item 26 of the appendix

to this part for information concerning

the education feature of Series EE

savings bonds issued on or after January

1, 1990, and of Series I savings bonds.)

13. In § 321.9, paragraph (a) is revised

to read as follows:

§ 321.9 Specific limitations on payment

authority.

* * * * *

(a) If it is a Series EE bond or a Series

I bond presented for payment prior to

six months from its issue date.

* * * * *

14. Section 321.12 is revised to read

as follows:

§ 321.12 Redemption value of securities.

The redemption value of each savings

security is determined by the terms of

its offering and the length of time it has

been outstanding. The Bureau of the

Public Debt determines redemption

values for Series A–E bonds, eligible

Series EE and I bonds, and savings

notes, that should be used in redeeming

savings securities.

15. Section 321.25 is amended by

removing paragraph (b)(2), by

redesignating paragraph (b)(1) as

paragraph (b), and by revising the entry

for the Federal Reserve Bank of

Minneapolis in the table in newly

designated paragraph (b) to read as

follows:

§ 321.25 Role of Federal Reserve Banks.

* * * * *

(b) * * *

Servicing officeReserve districts servedGeographic

area served

* * * * *

Federal Reserve Bank

of Minneapolis,

90 Hennepin Avenue,

Minneapolis

MN 55401.

Minneapolis,

Chicago.

IA, IL (northern half),

IN (northern half),

MI, MN,

MT, ND,

SD, WI.

* * * * *

16. The appendix heading and

paragraphs 2(a) and 2(b) of Subpart A of

the appendix to part 321 are revised to

read as follows:

Appendix to Part 321—Appendix to

Department of the Treasury Circular

No. 750, Fourth Revision

* * * * *

Subpart A—General Information

* * * * *

2. * * *

(a) Offering circulars. Department of

the Treasury Circulars, Public Debt

Series Nos. 1–80 (31 CFR part 351,

Series EE bonds), 2–80 (31 CFR part

352, Series HH bonds), 1–98 (31 CFR

part 359, Series I bonds), and 3–67 (31

CFR part 342, savings notes), and

Department of the Treasury Circulars

Nos. 653 (31 CFR part 316, Series E

bonds) and 905 (31 CFR part 339, Series

H bonds).

(b) Regulations. Department of the

Treasury Circular, Public Debt Series

No. 3–80 (Series EE and HH bonds);

Department of the Treasury Circular,

Public Debt Series 2–98 (Series I bonds);

Department of the Treasury Circulars
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38043

Nos. 530 (all other series of savings

securities) and 888 (special

endorsements); Federal Tax Regulations

(26 CFR 1.6049); Federal Claims

Collection Standards (4 CFR parts 101–

105); Regulation J, Collection of Checks

and Other Items and Wire Transfers of

Funds (12 CFR part 210); and operating

circulars issued by Federal Reserve

Banks relating to the collection of cash

items and Federal payments by ACH.

* * * * *

17. Subpart C, paragraph 7(a) and

10(a), of the appendix to part 321 are

revised to read as follows:

* * * * *

Subpart C—Scope of Authority

7. * * *

(a) General. [§ 321.7(a)] The general

authority of paying agents to redeem

savings securities for cash extends to

Series A, B, C, D, E, EE, and I bonds and

savings notes presented by the owner,

coowner, surviving beneficiary, parent

on behalf of a minor, legal

representative designated in the

registrations of savings securities

presented, or legal representative of the

last deceased registrant’s estate. The

presenter must sign the requests for

payment and establish his or her

identity and, in the case of a beneficiary,

parent or legal representative of the last

deceased registrant’s estate, entitlement

to request payment.

* * * * *

10. * * *

(a) Requirements for redeeming securities.

[§ 321.10(a)] A paying agent shall redeem

eligible savings securities during its regular

business hours for a presenter who

establishes his or her identity as the owner

or coowner of the securities, in accordance

with this part and this appendix. While a

paying agent is not required to redeem

eligible Series E and EE savings bonds and

savings notes in exchange for Series HH

bonds for any presenter, or Series E, EE, or

I bonds or savings notes for cash upon the

request of a surviving beneficiary or legal

representative, it is encouraged to do so,

provided the presenter can establish his/her

identity and provide acceptable evidence to

accordance with this part and this appendix

(See § 321.7 (d) and (f)). An agent is not

required to redeem savings securities during

Saturday and evening hours if it is open

during such periods primarily as a service for

its depositors.

* * * * *

18. Subpart D, paragraphs 13(a), 13

(b), 13(d), 14(d), 15 and 17(b) of the

appendix to part 321 are revised to read

as follows:

* * * * *

Subpart D—Payment and Transmittal of

Securities

* * * * *

13. * * *

(a) Redemption value tables. [§ 321.12] The

Bureau of the Public Debt distributes

redemption values in various formats and as

part of programs for personal computers, for:

(1) Series E bonds, (2) Series EE bonds, (3)

Series I bonds, and (4) savings notes.

Additional tables or information may be

requested from the appropriate Federal

Reserve Bank referred to in § 321.25.

(b) Use of tables. [§ 321.12] Care should be

exercised to correctly determine the current

redemption value of the security presented

for the month in which it is redeemed.

Incorrect payments can lead to costly and

time-consuming adjustments for the agent,

Department of the Treasury, and the

appropriate Federal Reserve Bank referred to

in § 321.25.

* * * * *

(d) Redemption-exchange. [§ 321.12] The

redemption values of eligible Series E and EE

savings bonds and savings notes presented

for exchange (Series I savings bonds are not

eligible for exchange) for Series HH bonds

shall be those payable in the month the agent

accepts a correctly completed and signed

exchange subscription, Public Debt Form

3253. The total redemption value of

securities presented for exchange in any one

transaction must be at least $500. If the

redemption value is $500 or an even multiple

thereof, Series HH bonds must be requested

in that exact amount. If the redemption value

exceeds $500, but is not an even multiple of

that amount, the presenter may add cash to

increase the amount of the subscription to

the next higher $500 multiple, or reduce the

amount of the subscription to the next lower

$500 multiple. The maximum amount which

may be added to or refunded in an exchange

transaction is $499.99. For example, if the

total redemption value of the securities is

$4,253.33, the presenter may request no less

than $4,000 and no more than $4,500 in

Series HH bonds. In the first instance, the

agent will pay the presenter $253.33; in the

second, it will collect $246.67 when it

accepts the exchange subscription.

14. * * *

(d) Redemption-exchange. [§ 321.13]

Eligible Series E and EE savings bonds and

savings notes presented for redemptionexchange shall be stamped ‘‘PAID’’ in the

same manner as securities redeemed for cash,

but only when all elements of the transaction

have been completed, including receipt of

any additional cash. The exact date of

redemption shall also be recorded on the

exchange subscription to enable the

appropriate Federal Reserve Bank referred to

in § 321.25 to establish the proper issue date

for the Series HH bonds. An officer or other

authorized employee of the agent shall also

sign the exchange subscription, in his or her

official capacity, and furnish other requested

information that identifies the paying agent.

* * * * *

15. Transmittal of securities to Federal

Reserve Bank. [§ 321.14] An agent shall

transmit and receive settlement for redeemed

securities via EZ CLEAR, i.e., the Check

Department of a Federal Reserve Bank or

Branch or the Regional Check Processing

Center. Redeemed securities may be

transmitted in separately sorted or mixed

cash letters to the Check Department of a

Federal Reserve Bank or Branch, or to a

Regional Check Processing Center, either

directly, or via a parent office or

correspondent institution. An agent shall

transmit redeemed securities under cover of

the appropriate transmittal document.

Eligible Series E and EE savings bonds and

savings notes redeemed in exchange for

Series HH bonds must be transmitted for

settlement via EZ CLEAR at the same time as

the exchange application (Public Debt Form

3253) and any additional cash needed to

complete the transaction are forwarded to the

Fiscal Agency Department of the servicing

Federal Reserve Bank referred to in § 321.25.

Eligible Series E and EE savings bonds and

savings notes redeemed on exchange may be

commingled with cash redemptions in mixed

or separately sorted cash letters.

* * * * *

17. * * *

(b) Composition of cash letters. [§ 321.14]

Series A, B, C, D, E, EE, and I bonds and

savings notes redeemed for cash or eligible

Series E and EE bonds and savings notes

redeemed on exchange may be commingled

in mixed cash letters containing commercial

checks and other items or separately sorted

cash letters containing only redeemed

securities. Each cash letter shall also contain

a listing prepared in accordance with the

Federal Reserve Bank’s instructions.

* * * * *

19. Subpart F, paragraph 23(e), of the

Appendix to part 321 is revised to read

as follows:

* * * * *

Subpart F—Forwarding Items

23. * * *

(e) Partial redemption. [§§ 321.9(l) and

321.22] Partial redemption of a security other

than a $25 Series E bond or savings note, a

$50 Series EE or I bond, or a $500 Series H

or HH bond may be made by the appropriate

Federal Reserve Bank referred to in § 321.25.

The amount paid must be equal to the

redemption value of one or more authorized

denominations on the date of the transaction.

If a security is received by an agent for partial

redemption, the words ‘‘to the extent of $

(face amount) and reissue of the remainder’’

should be added to the first sentence of the

request for payment. The request should then

be completed in the regular manner and the

signature of the presenter certified or

guaranteed. The security shall be forwarded

to the Fiscal Agency Department of a Federal

Reserve Bank.

* * * * *

20. Subpart G, paragraph 26(a), of the

Appendix to part 321 is revised to read

as follows:

* * * * *

Subpart G—Miscellaneous Provisions

* * * * *

26. * * *

(a) Section 6009 of the Technical

Corrections and Miscellaneous Revenue Act

of 1988, Public Law 100–647 (see 26 U.S.C.

135), permits taxpayers to exclude all, or a

portion, of the interest earned on Series EE

savings bonds bearing issue dates on or after
38044 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

January 1, 1990, and on Series I savings

bonds from their income under certain

conditions. This legislation did not create

new savings bond redemption and interest

reporting requirements for savings bond

paying agents. However, if a bond owner

indicates that he or she intends to seek the

special tax treatment offered under this

program, the paying agent is encouraged to

provide assistance by:

(1) Suggesting that he or she read IRS Form

8815 (particularly, the instructions on the

form) as well as relevant portions of IRS

Publication 17, ‘‘Your Federal Income Tax ‘‘,

and Publication 550, ‘‘Investment Income

and Expenses,’’ for detailed information; and

(2) Suggesting that the presenter make a

record of eligible bonds redeemed either by

using IRS Optional Form 8818, or otherwise.

* * * * *

PART 330—REGULATIONS

GOVERNING PAYMENT UNDER

SPECIAL ENDORSEMENT OF UNITED

STATES SAVINGS BONDS AND

UNITED STATES SAVINGS NOTES

(FREEDOM SHARES)

21. The authority citation for part 330

is revised to read as follows:

Authority: 5 U.S.C. 301; 31 U.S.C. 3105.

22. In § 330.1, paragraph (f) is revised

to read as follows:

§ 330.1 Definition of terms.

* * * * *

(f) Savings bond(s) or bond(s) means

a United States Savings Bond of Series

A, B, C, D, E, EE, or I.

* * * * *

23. In § 330.5, paragraph (a) is revised

to read as follows:

§ 330.5 Evidence of owner’s or

beneficiary’s authorization to affix special

endorsement.

(a) Form of authorization. The

Treasury does not prescribe the form or

type of instructions an agent must

obtain from each owner, co-owner or

beneficiary in order to use the special

endorsement procedure. In the case of

eligible Series E and EE savings bonds

and savings notes presented for a

redemption-exchange, the owner,

coowner or beneficiary authorized to

request the exchange (as specified in

Circular No. 750, § 321.8(b)), must sign

the exchange subscription even though

the eligible Series E and EE savings

bonds and savings notes are specially

endorsed.

* * * * *

24. In § 330.6, paragraph (a) is revised

to read as follows:

(a) General authority. A qualified

agent is authorized to affix the special

endorsement to:

(1) Savings bonds of Series A, B, C, D,

E, EE, and I and savings notes to be

redeemed for cash; and

(2) Eligible savings bonds of Series E

and EE and savings notes to be

redeemed in exchange for Series HH

bonds under the provisions of Circular

No. 2–80 (31 CFR part 352).

* * * * *

25. Section 330.7 is revised to read as

follows:

§ 330.7 Payment or redemption-exchange

by agent.

Specially endorsed securities may be

paid in cash or, if they are eligible

Series E and EE savings bonds or

savings notes, redeemed in exchange for

Series HH bonds pursuant to the

authority and subject, in all other

respects, to the provisions of Circular

No. 750, current revision (31 CFR part

321), its appendix, and any other

instructions issued under its authority.

Each specially endorsed bond or note

paid by an agent must have the agent’s

payment stamp imprinted on its face

and show the date and amount paid.

Securities so paid should be combined

with other securities paid under that

Circular and presented for settlement

through EZ CLEAR. Securities redeemed

by an agent in an exchange must be

presented for settlement through EZ

CLEAR separately from, but at the same

times as, an exchange subscription and

any remittance are forwarded to the

Fiscal Agency Department of the

appropriate Federal Reserve Bank.

26. Section 330.8 is revised to read as

follows:

§ 330.8 Payment or redemption-exchange

by Federal Reserve Bank.

Specially endorsed securities which

an agent is not authorized to redeem for

cash or on exchange should be

forwarded to the Fiscal Agency

Department of the designated Federal

Reserve Bank. The transmittals must be

accompanied by appropriate

instructions governing the transaction

and the disposition of the redemption

proceeds or new bonds, as the case may

be. The securities must be kept separate

from others the agent has paid and must

be submitted in accordance with

instructions issued by the Bank.

27. In § 330.9, paragraph (b)(2) is

removed, paragraph (b)(1) is

redesignated as paragraph (b) and the

table in newly designated paragraph (b)

is amended by revising the entry for the

Federal Reserve Bank of Minneapolis to

read as follows:

§ 330.9 Fiscal agents.

* * * * *

(b) * * *

Servicing officeReserve districts servedGeographic

area served

* * * * *

Federal Reserve Bank

of Minneapolis,

90 Hennepin Avenue,

Minneapolis

MN 55401.

Minneapolis,

Chicago.

IA, IL (northern half),

IN (northern half),

MI, MN,

MT, ND,

SD, WI.

* * * * *

28. Section 330.10 is revised to read

as follows:

§ 330.10 Modifications of other circulars.

The provisions of this part shall be

considered as amending and

supplementing: Department of the

Treasury Circulars Nos. 530, 653, and

750 (31 CFR parts 315, 316, and 321,

respectively), and Department of the

Treasury Circulars, Public Debt Series

Nos. 1–80, 2–80, 3–80, 3–67, 1–98, and

2–98 (31 CFR parts 351, 352, 353, 342,

359, and 360 respectively), and any

revisions thereof or amendments or

supplements thereto, and those

Circulars are hereby modified to the

extent necessary to accord with the

provisions of this part.

29. Part 359 is added to read as

follows:

PART 359—OFFERING OF UNITED

STATES SAVINGS BONDS, SERIES I

Sec.

359.0 Offering of bonds.

359.1 Governing regulations.

359.2 Description of bonds.

359.3 Investment considerations.

359.4 Registration and issue.

359.5 Limitation on purchases.

359.6 Purchase of bonds.

359.7 Delivery of bonds.

359.8 Payment or redemption.

359.9 Taxation.

359.10 Education savings bond program.

359.11 Reservation as to book-entry bonds.

359.12 Reservation as to issue of bonds.

359.13 Waiver.

359.14 Fiscal agents.

359.15 Reservation as to terms of offer.

Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31

U.S.C. 3105.

§ 359.0 Offering of bonds.

The Secretary of the Treasury offers

for sale to the people of the United

States, United States Savings Bonds of

Series I, hereinafter referred to as Series

I bonds or bonds. This offer, effective

September 1, 1998, will continue until

terminated by the Secretary of the

Treasury.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38045

§ 359.1 Governing regulations.

Series I bonds are subject to the

regulations of the Department of the

Treasury, now or hereafter prescribed,

governing United States Savings Bonds

of Series I, contained in Department of

the Treasury Circular, Public Debt

Series No. 2–98 (31 CFR part 360),

hereinafter referred to as Circular No. 2–

98. Treasury expressly disclaims the

effect of, and does not warranty the

correctness of, any representations or

warranties regarding Series I bonds,

wherever made, that in any way conflict

with the terms and conditions of Series

I bonds, as set out in these regulations

and other applicable law. The

regulations in 31 CFR part 370 apply to

transactions for the purchase of United

States Savings Bonds issued through the

Bureau of the Public Debt. The

regulations in 31 CFR part 370 do not

apply to transactions for the purchase of

bonds through issuing agents generally,

unless and to the extent otherwise

directed by the Commissioner of the

Bureau of the Public Debt or the

Commissioner’s designee.

§ 359.2 Description of bonds.

(a) General. Series I bonds are issued

only in registered form (subject to

§ 359.11) and are non-transferable. The

bonds may be either in book-entry or

definitive form.

(b) Denominations and prices. Series

I bonds are issued at par (face amount).

The denominations and purchase prices

are as follows:

Denomination Purchase

price

$ 50 ........................................... $50.00

75 .............................................. 75.00

100 ............................................ 100.00

200 ............................................ 200.00

500 ............................................ 500.00

1,000 ......................................... 1,000.00

5,000 ......................................... 5,000.00

10,000 ....................................... 10,000.00

(c) Term—maturity period. The issue

date of a Series I bond is the first day

of the month in which the issue price

is received by an authorized issuing

agent. Series I bonds have a maturity

period of 30 years, consisting of an

original maturity period of 20 years and

an automatic extension period of 10

years.

(d) Redemption. A Series I bond may

be redeemed beginning six months after

its issue date or at any time thereafter.

The Secretary of the Treasury may not

call a Series I bond for redemption prior

to an original maturity period of 20

years and an automatic extension period

of 10 years, for a total period of 30 years

from its issue date.

(e) Composite rates and redemption

values. (1) The following definitions

apply for determining the composite

rates and redemption values:

(i) Rate announcements. Rates

applicable to Series I bonds will be

furnished in rate announcements

published each May 1 and November 1.

If the regularly scheduled date for the

announcement (for example, May 1) is

a day when the Treasury is not open for

business, then the announcement is

made on the next business day;

however, the effective date of the rates

remains the first day of the month of the

announcement.

(ii) Fixed rate of return. Each May and

November the Secretary shall establish

the fixed rate of return for Series I bonds

issue-dated during the six-month period

beginning on such date. Such fixed rate

of return will be applicable for the life

of the bond.

(iii) Semiannual inflation rate. Each

May and November, Treasury will

announce a variable semiannual

inflation rate for Series I bonds. The

index used to determine this rate will be

the non-seasonally adjusted U.S. City

Average All Items Consumer Price Index

for All Urban Consumers (‘‘CPI–U’’)

published by the Bureau of Labor

Statistics (‘‘BLS’’) of the U.S.

Department of Labor. The semiannual

inflation rate to be effective with the

May announcement will reflect the rate

of change in the CPI–U for the sixmonth period ending with the

immediately preceding March 31. The

rate of change over the six-month period

will be expressed as a percentage,

rounded to the nearest one hundredth of

one percent. More specifically, the

semiannual inflation rate will reflect the

CPI–U value for the most recent March

less the value for the preceding

September, that difference will then be

divided by the CPI–U value for the

preceding September, and the result

will be multiplied by 100 to convert the

rate to a percentage. The resulting rate

will be rounded to the nearest onehundredth of one percent. The

semiannual inflation rate to be effective

with the November announcement,

reflecting the change in the CPI–U for

the six-month period ending with the

immediately preceding September, will

be similarly determined. In certain

deflationary conditions, the semiannual

inflation rate may be negative to such an

extent that it will offset the fixed rate of

return. However, the redemption value

of a Series I bond for any particular

month will not be less than the value for

the preceding month. (See § 359.3(b) for

a discussion of the lag between when

inflation is measured and when it is

reflected in the value of a bond.)

(iv) Index contingencies. If a

previously reported CPI–U is revised,

Treasury will continue to use the

previously reported CPI–U in

calculating redemption values. If the

CPI–U is rebased to a different year,

Treasury will continue to use the CPI–

U based on the base reference period in

effect when the security was first issued,

as long as that CPI continues to be

published. If, while an inflation-indexed

savings bond is outstanding, the

applicable CPI–U is: discontinued, in

the judgment of the Secretary,

fundamentally altered in a manner

materially adverse to the interests of an

investor in the security, or in the

judgment of the Secretary, altered by

legislation or Executive Order in a

manner materially adverse to the

interests of an investor in the security,

Treasury, after consulting with the

Bureau of Labor Statistics (‘‘BLS’’), or

any successor agency, will substitute an

appropriate alternative index. Treasury

will then notify the public of the

substitute index and how it will be

applied. Determinations of the Secretary

in this regard will be final.

(v) Composite rate. (A) The fixed rate

of return, FR, and the semiannual

inflation rate, SIR, as determined in

paragraphs (e)(1)(ii) and (iii) of this

section are divided by 100 to remove the

percentage format (i.e., to convert to

decimal form) and are then combined

into a composite annual rate, CR, in

accordance with the following formula:

CR = {SIR + (FR ÷ 2) + [SIR × (FR ÷ 2)]}

× 2

(B) The resulting annual rate is

converted to a percentage and is

rounded to the nearest one-hundredth of

one percent. The composite rates will be

announced by Treasury each May and

November, and will be derived from the

semiannual inflation rate announced on

the same date and the fixed rates of

return applicable to Series I savings

bonds.

(vi) Base denomination. All value

calculations are performed on a

hypothetical denomination of $25

having a value at the beginning of the

first semiannual rate period equal to the

issue price of $25. Redemption values

for bonds of greater denominations are

in direct proportion according to the

ratio of denominations. For example, if

the value of a hypothetical $25

denomination is $41.20—i.e., $25.00

issue price plus $16.20 accrued

interest—on the same redemption date,

the value of a $50 bond bearing the

same issue date is $41.20 × (50/25) or

$82.40.

(vii) Issue date. The issue date of a

Series I bond is the first day of the
38046 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

month in which payment of the issue

price is received by an authorized

issuing agent.

(viii) Redemption value. The

redemption value of a bond is that

amount that will be paid when the bond

is redeemed.

(ix) Accrual date. Earnings on a Series

I bond, if any, accrue on the first day of

each month. The redemption value of a

bond does not change between these

accrual dates.

(x) Semiannual rate periods.

Semiannual rate periods are the sixmonth periods beginning on the date of

issue and on each semiannual

anniversary of the date of issue to

maturity.

(xi) Maturity. Series I bonds have a

maturity period of 30 years, consisting

of an original period of 20 years and an

automatic extension period of 10 years.

The bonds have an interest paying life

of 30 years after the date of issue and

cease to increase in value as of that date.

(2) Interest rates and monthly

accruals. Series I composite rates,

defined in paragraph (e)(1)(v) of this

section, apply to earnings during the

first semiannual rate period beginning

on or after the effective date of the rate.

Interest, at the composite rate from the

beginning of the semiannual rate period,

accrues according to the formula

specified in paragraph (e)(4)(ii) of this

section. The following table shows, for

any given month of issue with

composite rates announced each May

and November, the months making up

the semiannual rate period during

which interest is earned at the

composite rate specified in the

announcement:

Month of issuance Semiannual rate

period (1) begins

Announcement date of composite

rate that applies during rate period

(1)

Semiannual rate

period (2) begins

Announcement date of composite

rate that applies during rate period

(2)

January .................... January 1 ............... November 1 (announced 2 months

prior to beginning of semiannual

rate period).

July 1 ..................... May 1 (announced 2 months prior to

beginning of semiannual rate period).

February .................. February 1 ............. November 1 (announced 3 months

prior to beginning of semiannual

rate period).

August 1 ................ May 1 (announced 3 months prior to

beginning of semiannual rate period).

March ....................... March 1 .................. November 1 (announced 4 months

prior to beginning of semiannual

rate period).

September 1 .......... May 1 (announced 4 months prior to

beginning of semiannual rate period).

April ......................... April 1 .................... November 1 (announced 5 months

prior to beginning of semiannual

rate period).

October 1 ............... May 1 (announced 5 months prior to

beginning of semiannual rate period).

May .......................... May 1 ..................... May 1 ................................................. November 1 ........... November 1.

June ......................... June 1 .................... May 1 (announced 1 month prior to

beginning of semiannual rate period).

December 1 ........... November 1 (announced 1 month

prior to beginning of semiannual

rate period).

July .......................... July 1 ..................... May 1 (announced 2 months prior to

beginning of semiannual rate period).

January 1 ............... November 1 (announced 2 months

prior to beginning of semiannual

rate period).

August ..................... August 1 ................ May 1 (announced 3 months prior to

beginning of semiannual rate period).

February 1 ............. November 1 (announced 3 months

prior to beginning of semiannual

rate period).

September ............... September 1 .......... May 1 (announced 4 months prior to

beginning of semiannual rate period).

March 1 .................. November 1 (announced 4 months

prior to beginning of semiannual

rate period).

October .................... October 1 ............... May 1 (announced 5 months prior to

beginning of semiannual rate period).

April 1 .................... November 1 (announced 5 months

prior to beginning of semiannual

rate period).

November ................ November 1 ........... November 1 ....................................... May 1 ..................... May 1.

December ................ December 1 ........... November 1 (announced 1 month

prior to beginning of semiannual

rate period).

June 1 .................... May 1 (announced 1 month prior to

beginning of semiannual rate period).

Notes: (1)Notwithstanding any consideration of the interest penalty for early redemption, interest earned during each month of a semiannual

rate period accrues according to the formula specified in § 359.2(e)(4)(ii).

(2) Also, if the regularly scheduled date for a composite rate announcement is a day that Treasury is not open for business, the announcement

will be made on the next business day; however, the effective date of the rate will be the first day of the month of the announcement.

(3) Interest penalty for Series I bonds

redeemed less than five years following

the issue dates. If a Series I bond is

redeemed less than five years following

the date of issue, the overall earning

period from the date of issue will be

reduced by three months. For example,

if a bond issued January 1, 1999, is

redeemed nine months later on October

1, 1999, the redemption value will be

determined by applying the value

calculation procedures described in

paragraph (e)(4) of this section and the

Series I bond composite rate for that

bond as if the redemption date were

three months earlier (July 1, 1999). The

redemption value of a bond subject to

the three-month interest penalty shall

not be reduced below the issue price.

This penalty does not apply to bonds

redeemed five years or more after the

date of issue.

(4) Redemption value calculations. (i)

Interest on a bond accrues and becomes

part of the redemption value which is

paid when the bond is redeemed.

(ii) The redemption value of a bond

for the accrual date (the first day of each

month) is determined in accordance

with this section and the following:

(A) Determine the composite rate as

defined in paragraph (e)(1)(v) of this

section. If the result of the composite

rate calculation is a negative value, zero

will be the assumed composite rate in

the redemption value calculation.

Redemption values are calculated using

the following formula:

FV = PV × {[1 + (CR ÷ 2)](m ÷ 6)

}

Where:

FV (future value) = redemption value on the

accrual date rounded to the nearest cent.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38047

PV (present value) = value at the beginning

of the semiannual rate period calculated

without consideration of penalty. For

bonds that are older than five years, PV

will equal the redemption value at the

start of the semiannual rate period.

CR = composite rate as defined in

paragraph(e)(1)(v) of this section

converted to decimal form by dividing

by 100.

m = number of full calendar months elapsed

during the semiannual rate period.

(B) The following hypothetical

examples illustrate how this formula is

applied:

(1) For a bond five years or older:

Example: i. Given a Series I bond

composite rate of 5.02%, effective May 1,

2003, for a hypothetical bond denominated at

$25, with an issue date of September 1, 1998,

and a redemption value of $31.90 as of

September 1, 2003, the February 1, 2004,

redemption value is calculated as follows:

bonds issue-dated in September have

semiannual rate periods beginning each

March 1 and September 1. The first

semiannual rate period to begin on or after

the date of the May 1, 2003, rate

announcement composite rate would be the

period beginning September 1, 2003. PV, the

present value, $31.90, would be the

redemption value of the bond at the

beginning of the semiannual rate period

(September 1, 2003). The composite rate,

5.02% converted to a decimal, would be

0.0502. The number of months, m, is five,

since five full calendar months (September

through January) have lapsed since the

beginning of the semiannual rate period. FV,

the redemption value (rounded to the nearest

cent), is then the result of the formula:

FV = PV x {[1 + (CR ÷ 2)] (m ÷ 6)

} where

FV = 31.90 x {[1 + (0.0502 ÷ 2)] (5 ÷ 6)

}

= $32.57

ii. The redemption value for the actual

denomination of a Series I bond can be

determined by applying the appropriate

multiple, for example: $32.57 x ($100.00 ÷

$25.00) for a bond with a $100.00 face

amount; or $32.57 x ($1000.00 ÷ $25.00) for

a bond with a $1000.00 face amount.

(2) For a bond less than five years old:

Example: i. Assume a composite rate of

5.07% effective May 1, 2003, for a bond

denominated at $25.00, with an issue date of

December 1, 2000, a redemption date of

February 1, 2004, and a value on June 1,

2003, of $28.45, without consideration of

penalty. A three-month penalty is assessed

since the redemption date is less than five

years after the issue date. The penalty is

accounted for by assuming that the

redemption date is three months earlier

(November 1, 2003). The February 1, 2004,

redemption value is then calculated as

follows: bonds issue-dated in December have

semiannual rate periods that begin each June

1 and December 1. The first semiannual rate

period to begin on or after the May 1, 2003,

rate announcement composite rate would be

the period beginning June 1, 2003. PV, the

present value, $28.45, is the value of the

bond at the beginning of the semiannual rate

period (June 1, 2003), without consideration

of penalty. The composite rate, 5.07%,

converted to a decimal, would be 0.0507. The

number of months, m, is five, since five full

calendar months (June through October) have

elapsed since the beginning of the

semiannual rate period and the redemption

date (as adjusted for penalty). FV, the

redemption value (rounded to the nearest

cent), is then the result of the formula:

FV = PV x {[1 + (CR ÷ 2)] (m ÷ 6)} where

FV = $28.45 x {[1 + (0.0507 ÷ 2)] (5 ÷

6)

} = $29.05

ii. The redemption value for the actual

denomination of a Series I bond can be

determined by applying the appropriate

multiple, for example: $29.05 x ($100.00 ÷

$25.00) for a bond with a $100.00 face

amount; or $29.05 x ($1000.00 ÷ $25.00) for

a bond with a $1000.00 face amount.

(5) The Secretary’s determination.

The determination by the Secretary of

the Treasury, or the Secretary’s

designee, of fixed rates of return,

semiannual inflation rates, composite

rates, and savings bond redemption

values shall be final and conclusive.

(6) Tables of redemption values.

Tables of redemption values are made

available in various formats and media,

including on the Internet, by the Bureau

of the Public Debt, Parkersburg, West

Virginia 26106–1328. Treasury reserves

the right to cease making the tables of

redemption values available in any of

these formats or media. Redemption

values published in such tables reflect

the three-month interest penalty applied

to bonds redeemed prior to five years

from the date of issue.

§ 359.3 Investment considerations.

(a) Index contingencies. (1) If a

previously reported CPI is revised,

Treasury will continue to use the

previously reported CPI in calculating

redemption values.

(2) If the CPI is rebased to a different

year, Treasury will continue to use the

CPI based on the base reference period

in effect when the savings bond was

first issued, as long as that CPI

continues to be published.

(3) If, while a Series I savings bond is

outstanding, the applicable CPI is

discontinued, in the judgment of the

Secretary, fundamentally altered in a

manner materially adverse to the

interests of an investor in the savings

bond, or in the judgment of the

Secretary, altered by legislation or

Executive Order in a manner materially

adverse to the interests of an investor in

the savings bond, Treasury, after

consulting with the Bureau of Labor

Statistics, or any successor agency, will

substitute an appropriate alternative

index. Treasury will then notify the

public of the substitute index and how

it will be applied. Determinations of the

Secretary in this regard will be final.

(4) If the CPI for a particular month is

not reported by the last day of the

following month, the Treasury will

announce an index number based on the

last 12-month change in the CPI

available. Any calculations of the

Treasury’s payment obligations on the

inflation-indexed savings bond that rely

on that month’s CPI will be based on the

index number that Treasury has

announced.

(b) Inflation lag. (1) The inflation rate

component of investor earnings will be

determined twice each year. This rate

will be the percentage change in the

CPI–U for the six months ending each

March and September. The rate will be

included in the composite rate that is

announced each May and November.

Each composite rate will be effective for

the entirety of all semiannual rate

periods that begin while the rate is in

effect. Thus, an inflation rate may affect

interest accruals from 3 to 13 months

from the date that the CPI–U is

measured.

(2) For example, the inflation rate

determined from the CPI–U for the sixmonth period from October 1, 2003,

through March 31, 2004, will be

included in the composite rate

announced on May 1, 2004. For a bond

purchased in May 1999, this rate will go

into effect immediately, since a new

semiannual rate period for this bond

will begin on May 1, 2004. Series I

bonds issued in May begin new

semiannual rate periods in the months

of May and November. In this example,

the inflation rate will have its earliest

impact in June 2004, when interest from

May accrues, three months after the end

of the six-month CPI–U period that ends

March 31, 2004.

(3) As another example, the May 1,

2004, rate will apply similarly to a bond

purchased in October 1999. Series I

bonds issued in October begin new

semiannual rate periods in the months

of April and October. Thus, for this

bond, the May 1, 2004, composite rate

(which includes the inflation rate) will

not go into effect until a new

semiannual rate period begins on

October 1, 2004. This rate, therefore,

will determine the inflation-indexed

portion of each interest accrual from

November 2004 through April 2005. In

this example, the inflation rate will have

its latest impact in April 2005, 13

months following the six-month CPI-U

period that ended March 31, 2004.

(c) Liquidity. A Series I bond may be

redeemed beginning six months after its

issue date or at any time thereafter.

However, a bond redeemed less than

five years from its issue date will be
38048 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

subject to a three-month interest

penalty.

(d) Early redemption penalty. If a

Series I bond is redeemed less than five

years following the date of issue, the

overall earning period from the date of

issue will be reduced by three months.

For example, if a bond issued January 1,

1999, is redeemed nine months later on

October 1, 1999, the redemption value

will be determined by applying the

redemption value calculation

procedures described in § 359.2(e)(4)

and the Series I composite rate for that

bond as if the redemption date were

three months earlier (July 1, 1999). The

redemption value of a bond subject to

the three-month interest penalty shall

not be reduced below the issue price.

This penalty does not apply to bonds

redeemed five years or more after the

date of issue.

§ 359.4 Registration and issue.

(a) Registration. Bonds may be

registered as set forth in 31 CFR part

360, subpart B, also published as

Department of the Treasury Circular,

Public Debt Series No. 2–98. Generally,

bonds may be registered in the names of

natural persons in single owner,

coowner (for example: ‘‘John Doe 123–

45–6789 OR Mary Doe’’), or beneficiary

(‘‘John Doe 123–45–6789 payable on

death to (POD) Mary Doe’’) forms of

registration.

(b) Validity of issue. A bond is validly

issued when it is registered as provided

in Circular No. 2–98, and when it bears

an issue date, as well as the validation

indicia of an authorized issuing agent.

(c) Taxpayer Identifying Number

(TIN). The inscription of a bond must

include the TIN of the owner or firstnamed coowner. If the bond is being

purchased as a gift or award and the

owner’s TIN is not known, the TIN of

the purchaser must be included in the

inscription on the bond.

(d) Prohibition on chain letters. The

issuance of bonds in the furtherance of

a chain letter or pyramid scheme is

against the public interest and is

prohibited. An issuing agent is

authorized to refuse to issue a bond or

accept a purchase order if there is

reason to believe that a purchase is in

connection with a chain letter. The

agent’s decision is final.

§ 359.5 Limitation on purchases.

The amount of Series I bonds which

may be purchased in the name of any

one person, in any one calendar year, is

limited to $30,000 par value. Circular

No. 2–98 (31 CFR part 360, subpart C)

contains the rules governing the

computation of amounts and the special

limitation for employee plans.

§ 359.6 Purchase of bonds.

(a) Payroll sales—(1) Payroll savings

plans. Bonds may be purchased through

deductions from the pay of employees

of organizations that maintain payroll

savings plans. The bonds must be issued

by an authorized issuing agent.

(2) Employee thrift, savings, vacation,

and similar plans. Bonds registered in

the names of employee plans may be

purchased in book-entry form in

authorized denominations through a

designated Federal Reserve Bank after

Bureau of the Public Debt approval of

the plan as eligible for the special

limitation under 31 CFR 360.13, also

published as § 360.13 of Department of

the Treasury Circular, Public Debt

Series No. 2–98.

(b) Over-the-counter sales—(1)

Eligible issuing agents. Bonds may be

purchased through any issuing agent,

except that an organization serving as an

issuing agent because of its status as an

employer or an organization operating

an employer’s payroll savings plan

under 31 CFR 317.2(c) may sell bonds

only through payroll savings plans.

(2) Manner of sale. An application for

the purchase of a bond must be

accompanied by a remittance to cover

the issue price. The purchase

application and remittance may be

submitted to an issuing agent by any

means acceptable to the issuing agent.

An application may authorize purchases

on a recurring basis. The issuing agent

bears the burden of collection and the

risk of loss for non-collection or return

of the remittance.

§ 359.7 Delivery of bonds.

Issuing agents are authorized to

arrange for the delivery of Series I

bonds. Mail deliveries are made at the

risk and expense of the United States to

the address given by the purchaser, if it

is within the United States, its

territories or possessions, or the

Commonwealth of Puerto Rico. No mail

deliveries elsewhere will be made,

except to residents of Mexico and

Canada who participate in payroll

saving plans. Bonds purchased by a

citizen of the United States residing

abroad will be delivered only to such

address in the United States as the

purchaser directs.

§ 359.8 Payment or redemption.

(a) Incorporated banks, savings and

loan associations and other financial

institutions—(1) Payment in general. A

financial institution qualified as a

paying agent under the provisions of 31

CFR part 321, also published as

Department of the Treasury Circular No.

750, will pay the current redemption

value of a Series I bond presented for

payment by an individual whose name

is inscribed on the bond as owner or

coowner, provided:

(i) The bond is in order for payment;

and

(ii) The presenter establishes his or

her identity to the satisfaction of the

agent, in accordance with Treasury

instructions and identification

guidelines, and signs and completes the

request for payment.

(2) Payment to beneficiary or legal

representative. A paying agent may (but

is not required to) pay the current

redemption value of a Series I bond

upon the request of a beneficiary, if he

or she survives the owner, or a legal

representative designated in the bond

registration by name and capacity, or a

court-appointed representative of the

last-deceased registrant’s estate

provided:

(i) The bond is in order for payment;

and

(ii) The presenter establishes his or

her identity to the satisfaction of the

agent in accordance with Treasury

instructions and identification

guidelines, and otherwise complies with

evidentiary requirements.

(b) Federal Reserve Banks and

Branches. A Federal Reserve Bank or

Branch referred to in § 359.14 will pay

the current redemption value of a Series

I bond presented for payment, provided

the bond is in order for payment and the

request for payment on the bond is

properly signed and certified in

accordance with Circular No. 2–98.

§ 359.9 Taxation.

(a) General. The increment in value,

represented by the difference between

the face (par amount) of a Series I bond

and the redemption value received for

it, is interest. This interest is subject to

all taxes imposed under the Internal

Revenue Code of 1986, as amended. The

bonds are subject to estate, inheritance,

gift, or other excise taxes, whether

Federal or State, but are exempt from all

other taxation now or hereafter imposed

on the principal or interest by any State,

any possession of the United States or

any local taxing authority.

(b) Federal income tax on bonds. (1)

An owner of Series I bonds may use

either of the following two methods for

reporting the increase in the redemption

value of the bond for Federal income tax

purposes:

(i) Cash basis. Defer reporting the

increase to the year of final maturity,

redemption, or other disposition,

whichever is earlier; or

(ii) Accrual basis. Elect to report the

increase each year as it accrues, in

which case the election applies to all

Series I bonds then owned by the
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38049

taxpayer and those subsequently

acquired as well as to any other

obligations purchased on a discount

basis, such as savings bonds of Series E

or EE.

(2) If the method in paragraph (b)(1)(i)

of this section is used, the taxpayer may

change to the method in paragraph

(b)(1)(ii) of this section without

obtaining permission from the Internal

Revenue Service. However, once the

election to use the method in paragraph

(b)(1)(ii) of this section is made, the

taxpayer may change the method of

reporting only by following the specific

procedure prescribed by the Internal

Revenue Service. For further

information, the District Director of the

taxpayer’s district, or the Internal

Revenue Service, Washington, DC

20224, should be consulted.

(c) Reissue. A reissue that affects the

rights of any of the persons named on

a Series I bond may have a tax

consequence.

§ 359.10 Education savings bond program.

A bond owner or coowner may be

able to exclude from income for Federal

income tax purposes all or part of the

interest received on the redemption of

qualified savings bonds during the year,

if that owner or coowner paid qualified

higher education expenses during the

same year and certain other conditions

are satisfied. This exclusion is known as

the Education Savings Bond Program,

and authoritative information about the

program can be found in Internal

Revenue Service Publication 17, ‘‘Your

Federal Income Tax’’, and Publication

550, ‘‘Investment Income and

Expenses.’’

§ 359.11 Reservation as to book-entry

bonds.

The Commissioner of the Public Debt,

as designee of the Secretary of the

Treasury, reserves the right: To convert

at any time, in whole or in part, any

definitive Series I savings bonds to

book-entry Series I savings bonds; and

to issue Series I savings bonds only in

book-entry form. The Commissioner’s

action in any such respect is final.

§ 359.12 Reservation as to issue of bonds.

The Commissioner of the Public Debt,

as designee of the Secretary of the

Treasury, is authorized to reject any

application for Series I bonds, in whole

or in part, and to refuse to issue, or

permit to be issued, any bonds in any

case or class of cases, if the

Commissioner deems the action to be in

the public interest, and the

Commissioner’s action in any such

respect is final.

§ 359.13 Waiver.

The Commissioner of the Public Debt,

as designee of the Secretary of the

Treasury, may waive or modify any

provision of this Circular in any

particular case or class of cases for the

convenience of the United States or in

order to relieve any person or persons

of unnecessary hardship:

(a) If such action would not be

inconsistent with law or equity;

(b) If it does not impair any material

existing rights; and

(c) If he or she is satisfied that such

action would not subject the United

States to any substantial expense or

liability.

§ 359.14 Fiscal agents.

(a) Federal Reserve Banks and

Branches referred to below, as fiscal

agents of the United States, are

authorized to perform such services as

may be requested of them by the

Secretary of the Treasury, or his or her

designee, in connection with the issue,

servicing and redemption of Series I

bonds. The Federal Reserve Banks and

Branches, as fiscal agents of the United

States, are subject to change (for

example, due to consolidation), as

determined by the Secretary of the

Treasury, or his or her designee.

(b) The following Federal Reserve

Offices have been designated to provide

savings bond services:

Servicing office Reserve district served Geographic area served

Federal Reserve Bank, Buffalo Branch, 160 Delaware

Avenue, Buffalo, NY

14202.

New York, Boston .............. Connecticut, Maine, Massachusetts, New Hamsphire, New Jersey (northern half),

New York, Rhode Island, Vermont, Puerto Rico, Virgin Islands.

Federal Reserve Bank, Pittsburgh Branch, 717 Grant

Street, Pittsburgh, PA

15219.

Cleveland, Philadephia ...... Delaware, Kentucky (eastern half), New Jersey (southern half), Ohio, Pennsylvania,

West Virginia (northern panhandle).

Federal Reserve Bank of

Richmond, 701 East Byrd

Street, Richmond, VA

23219.

Richmond, Atlanta .............. Alabama, District of Columbia, Florida, Georgia, Louisiana (southern half), Maryland, Mississippi (southern half), North Carolina, South Carolina, Tennessee

(eastern half), Virginia, West Virginia (except northern panhandle).

Federal Reserve Bank of

Minneapolis, 90 Hennepin

Avenue, Minneapolis, MN

55401.

Minneapolis, Chicago ......... Illinois (northern half), Indiana (northern half), Iowa, Michigan, Minnesota, Montana,

North Dakota, South Dakota, Wisconsin.

Federal Reserve Bank of

Kansas City, 925 Grand

Boulevard, Kansas City,

MO 64106.

Dallas, Kansas City, St.

Louis, San Francisco.

Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Illinois (southern

half), Indiana (southern half), Kansas, Kentucky (western half), Louisiana (northern half), Mississippi (northern half), Missouri, Nebraska, Nevada, New Mexico,

Oklahoma, Oregon, Tennessee (western half), Texas, Utah, Washington, Wyoming, Guam.

§ 359.15 Reservation as to terms of offer.

The Secretary of the Treasury may at

any time or from time to time

supplement or amend the terms of this

offering of bonds.

30. Part 360 is added to read as

follows:

PART 360—REGULATIONS

GOVERNING UNITED STATES

SAVINGS BONDS, SERIES I

Subpart A—General Information

Sec.

360.0 Applicability.

360.1 Official agencies.

360.2 Definitions.

Subpart B—Registration

360.5 General rules.

360.6 Authorized forms of registration.

360.7 Chain letters prohibited.

Subpart C—Limitations on Annual

Purchases

360.10 Amounts which may be purchased.

360.11 Computation of amount.
38050 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

360.12 Disposition of excess.

360.13 Employee plans—Conditions of

eligibility.

Subpart D—Limitations on Transfer or

Pledge

360.15 Transfer.

360.16 Pledge.

Subpart E—Judicial Proceedings

360.20 General.

360.21 Payment to judgment creditors.

360.22 Payment or reissue pursuant to

divorce.

360.23 Evidence.

360.24 Payment pursuant to judicial or

administrative forfeiture.

Subpart F—Relief for Loss, Theft,

Destruction, Mutilation, Defacement, or

Nonreceipt of Bonds

360.25 General.

360.26 Application for relief; after receipt of

bond.

360.27 Application for relief; nonreceipt of

bond.

360.28 Recovery or receipt of bond before

or after relief is granted.

360.29 Adjudication of claims.

Subpart G—General Provisions for Payment

360.35 Payment (redemption).

360.36 Payment during life of sole owner.

360.37 Payment during lives of both

coowners.

360.38 Payment during lifetime of owner of

beneficiary bond.

360.39 Surrender for payment.

360.40 Special provisions for payment.

360.41 Partial redemption.

360.42 Nonreceipt or loss of remittance

issued in payment.

360.43 Effective date of request for

payment.

360.44 Withdrawal of request for payment.

Subpart H—Reissue and Denominational

Exchange

360.45 General.

360.46 Effective date of request for reissue.

360.47 Authorized reissue; during lifetime.

360.48 Restrictions on reissue;

denominational exchange.

360.49 Correction of errors.

360.50 Change of name.

360.51 Requests for reissue.

Subpart I—Certifying Officers

360.55 Individuals authorized to certify.

360.56 General instructions and liability.

360.57 When a certifying officer may not

certify.

360.58 Forms to be certified.

Subpart J—Minors, Incompetents, Aged

Persons, Absentees, et al.

360.60 Payment to representative of an

estate.

360.61 Payment after death.

360.62 Payment to minor.

360.63 Payment to a parent or other person

on behalf of a minor.

360.64 Payment or reinvestment—voluntary

guardian of an incapacitated person.

360.65 Reissue.

Subpart K—Deceased Owner, Coowner or

Beneficiary

360.70 General rules governing entitlement.

360.71 Estate administered.

360.72 Procedures for the payment or

reissue of bonds that are property

belonging to a decedent’s estate.

Subpart L—Fiduciaries

360.75 Payment or reissue during the

existence of the fiduciary estate.

360.76 Payment or reissue after termination

of the fiduciary estate.

Subpart M—Miscellaneous Provisions

360.90 Waiver of regulations.

360.91 Additional requirements; bond of

indemnity.

360.92 Supplements, amendments, or

revisions.

Authority: 5 U.S.C. 301; 31 U.S.C. 3105

and 3125.

Subpart A—General Information

§ 360.0 Applicability.

The regulations in this circular,

Department of the Treasury Circular,

Public Debt Series No. 2–98 (this part

360), govern transactions in United

States Savings Bonds of Series I. These

bonds bear issue dates of September 1,

1998, or thereafter.

§ 360.1 Official agencies.

(a) The Bureau of the Public Debt of

the Department of the Treasury is

responsible for administering the

Savings Bond Program. Authority to

process transactions has been delegated

to Federal Reserve Banks and Branches

listed in paragraph (b) of this section, as

fiscal agents of the United States. The

Federal Reserve Banks and Branches,

and their authority to process

transactions, as fiscal agents of the

United States, are subject to change, as

determined by the Secretary of the

Treasury, or his or her designee.

(b) Communications concerning

transactions and requests for forms

should be addressed to:

(1) A Federal Reserve Bank or Branch

in the list below; or, the Bureau of the

Public Debt, 200 Third Street,

Parkersburg, WV 26106–1328.

(2) The following Federal Reserve

Offices have been designated to provide

savings bond services:

Servicing office Reserve district served Geographic area served

Federal Reserve Bank, Buffalo Branch, 160 Delaware

Avenue, Buffalo, NY

14202.

New York, Boston .............. Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, (northern half),

New York, Rhode Island, Vermont, Puerto Rico, Virgin Islands.

Federal Reserve Bank, Pittsburgh Branch, 717 Grant

Street, Pittsburgh, PA

15219.

Cleveland, Philadelphia ...... Delaware, Kentucky (eastern half), New Jersey, (southern half), Ohio, Pennsylvania, West Virginia.

Federal Reserve Bank of

Richmond, 701 East Byrd

Street, Richmond, VA

23219.

Richmond, Atlanta .............. Alabama, District of Columbia, Florida, Georgia, Louisiana, (southern half), Maryland, Mississippi (southern half), North Carolina, South Carolina, Tennessee

(eastern half), Virginia, West Virginia (except northern panhandle).

Federal Reserve Bank of

Minneapolis, 90 Hennepin

Avenue, Minneapolis, MN

55401.

Minneapolis, Chicago ......... Illinois (northern half), Indiana, (northern half), Iowa, Michigan, Minnesota, Montana, North Dakota, South Dakota, Wisconsin.

Federal Reserve Bank of

Kansas City, 925 Grand

Boulevard, Kansas City,

MO 64106.

Dallas, San Francisco,

Kansas City, St. Louis.

Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Illinois (southern

half), Indiana (southern half), Kansas, Kentucky, (western half), Louisiana (northern half), Mississippi (northern half), Missouri, Nebraska, Nevada, New Mexico,

Oklahoma, Oregon, Tennessee (western half), Texas, Utah, Washington, Wyoming, Guam.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38051

(c) Notices and documents must be

filed with the agencies referred to in

paragraphs (a) and (b) of this section

and as indicated in the regulations in

this part.

§ 360.2 Definitions.

(a) Bond means a United States

Savings Bond of Series I, either in bookentry form, represented by an

accounting entry or electronic record of

a Federal Reserve Bank acting as fiscal

agent of the United States, or the

Department of the Treasury, or in

definitive form, as a certificate.

(b) Incompetent means an individual

who is incapable of handling his or her

business affairs because of a legal,

mental or medical disability, except that

a minor is not an incompetent solely

because of age.

(c) Issuing agent means an

organization that has been qualified

under the provisions of Department of

the Treasury Circular, Public Debt

Series No. 4–67, as revised and

amended (31 CFR part 317), to issue

savings bonds.

(d) Paying agent means a financial

institution that has been qualified under

the provisions of Department of the

Treasury Circular No. 750, as revised

and amended (31 CFR part 321), to

make payment of savings bonds.

(e) Payment means redemption,

unless otherwise indicated by the

context.

(f) Person means a legal entity

including an individual or fiduciary

estate.

(g) Personal trust estates means trust

estates established by natural persons in

their own right for the benefit of

themselves or other natural persons in

whole or in part, and common trust

funds comprised in whole or in part of

such trust estates.

(h) Reissue means the cancellation

and retirement of a bond and the

issuance of a new bond or bonds of the

same series, same issue date, and same

total face amount.

(i) Representative of the estate of a

minor, incompetent, aged person,

absentee, et al. means the courtappointed or otherwise qualified

person, regardless of title, who is legally

authorized to act for the individual. The

term does not include parents in their

own right, voluntary or natural

guardians, attorneys-in-fact, trustees of

personal and similar trust estates, or the

executors or administrators of

decedents’ estates.

(j) Surrender means the actual receipt

of a definitive bond with an appropriate

request for payment or reissue by either

a Federal Reserve Bank or Branch or the

Bureau of the Public Debt, or, if a paying

agent is authorized to handle the

transaction, the actual receipt of the

definitive bond and the request for

payment by the paying agent.

(k) Taxpayer Identifying Number

means a social security account number

or an employer identification number.

(l) Voluntary guardian means an

individual who is recognized as

authorized to act for an incompetent, as

provided by § 360.64.

Subpart B—Registration

§ 360.5 General rules.

(a) Registration is conclusive of

ownership. Savings bonds of Series I are

issued only in registered form. The

registration must express the actual

ownership of, and interest in, the bond.

The registration is conclusive of

ownership, except as provided in

§ 360.49.

(b) Requests for registration. (1)

Registrations requested must be clear,

accurate and complete, conform

substantially with one of the forms set

forth in this subpart, and include the

taxpayer identifying number of the

owner or first-named coowner. The

registration of all bonds owned by the

same individual or fiduciary estate

should be uniform with respect to the

name of the owner and any description

of the fiduciary capacity.

(2) An individual should be

designated by the name he or she is

ordinarily known by or uses in business,

including at least one full given name.

The name may be preceded or followed

by any applicable title, such as Mr.,

Mrs., Ms., Miss, Dr., Rev., M.D., or D.D.

A suffix, such as Sr. or Jr., must be

included when ordinarily used or when

necessary to distinguish the owner from

another member of his family. A

married woman’s own first name, not

that of her husband, must be used, for

example, Mary A. Jones or Mrs. Mary A.

Jones, NOT Mrs. Frank B. Jones. The

address must include, where

appropriate, the number and street,

route, or any other local feature, city,

State, and ZIP Code.

(c) Inscription of bonds purchased as

gifts. If the bonds are purchased as gifts,

awards, prizes, etc., and the taxpayer

identifying numbers of the intended

owners are not known, the purchaser’s

number must be furnished. Bonds so

inscribed will not be associated with the

purchaser’s own holdings. A bond

registered in the name of a purchaser

with another person as coowner or

beneficiary is not considered a gift or an

award. If the purchaser so requests, a

bond may be inscribed to provide a

‘‘Mail to’’ instruction, followed by a

delivery name and address. No rights of

ownership are conferred on such

designee.

§ 360.6 Authorized forms of registration.

Subject to any limitations or

restrictions contained in these

regulations on the right of any person to

be named as owner, coowner, or

beneficiary, bonds should be registered

as indicated in this section. A savings

bond inscribed in a form not

substantially in agreement with one of

the forms authorized by this subpart is

not considered validly issued.

(a) Natural persons. A bond may be

registered in the names of individuals in

their own right, but only in one of the

forms authorized by this paragraph (a).

(1) Single ownership form. A bond

may be registered in the name of one

individual.

Example: Julie B. Jones, 123–45–6789.

(2) Coownership form. A bond may be

registered in the names of two

individuals in the alternative as

coowners. The form of registration ‘‘A

and B’’ is not authorized.

Examples: David R. Johnson 123–45–6789

or Anna B. Johnson. Maria S. Gonzalez 987–

65–4321 or Juan C. Gonzalez.

(3) Beneficiary form. A bond may be

registered in the name of one individual

payable on death to another. ‘‘Payable

on death to’’ may be abbreviated to

‘‘P.O.D.’’.

Examples: Catherine B. Jordan 123–45–

6789 payable on death to Daniel A. Jordan.

Henry C. Rodriguez 123–45–6789 P.O.D.

Maria S. Rodriguez.

(b) Fiduciaries (including legal

guardians, trustees, and similar

representatives). (1) General. A bond

may be registered in the name of any

person or persons or any organization

acting as fiduciary of a single fiduciary

estate, but not where the fiduciary will

hold the bond merely or principally as

security for the performance of a duty,

obligation, or service. A bond’s

registration should conform to a form

authorized by this paragraph. A

common trust fund established and

maintained by a financial institution

authorized to act as a fiduciary will be

considered a single fiduciary estate

within the meaning of the regulations in

this part.

(2) Legal guardians, conservators,

similar representatives, certain

custodians, etc. A bond may be

registered in the name and fiduciary

capacity of the legally appointed or

authorized representative of the estate of

a minor, incompetent, aged or infirm

person, absentee, et al., or of a personal

or testamentary trust.
38052 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

Examples: Tenth National Bank, Guardian

(or Conservator, Trustee, etc.) of the Estate of

George N. Brown 123–45–6789, a minor (or

an incompetent, aged person, infirm person,

or absentee). Henry C. Smith, Conservator of

the Estate of John R. White 123–45–6789, an

adult, pursuant to Sec. 633.572 of the Iowa

Code. Juan B. Gonzalez 123–45–6789, a

minor (or an incompetent) under

custodianship by designation of the Veterans

Administration. Frank M. Redd 123–45–

6789, an incompetent for whom Eric A. Redd

has been designated trustee by the

Department of the Army pursuant to 37

U.S.C. 602. Richard A. Rowe 123–45–6789,

for whom Reba L. Rowe is representative

payee for social security benefits (or black

lung benefits, as the case may be). Henry L.

Green 123–45–6789 or George M. Brown, a

minor under legal guardianship of the Tenth

National Bank. Henry L. Green 123–45–6789

P.O.D. George M. Brown, a minor under legal

guardianship of the Tenth National Bank.

Harbor State Hospital and School, selected

payee for Beth R. Weber 123–45–6789, a Civil

Service annuitant, pursuant to 5 U.S.C.

8345(e). John F. Green or Mary B. Doe,

Trustees of the Estate of Moe Green 123–45–

6789. Thomas J. White and Tenth National

Bank, Trustees under the Will of Robert J.

Benjamin, deceased 12–3456789. Tenth

National Bank, Trustee under Agreement

with Mark S. Dunston, dated 2/1/98, 12–

3456789. Ruth B. Grace and Pat A. Banks,

Trustees under Agreement with Susan L.

Chambers, dated 7/30/97, 12–3456789.

Dennis R. Adams, Trustee under Declaration

of Trust, dated 5/1/98, 12–3456789.

(3) Employee thrift, savings, vacation

and similar plans. Bonds may be

registered in the name and title, or title

alone, of the trustee of an eligible

employee thrift, savings, vacation,

401(k) or similar plan, as defined in

§ 360.13. If the instrument creating the

trust provides that the trustees shall

serve for a limited term, their names

may be omitted.

Examples: Tenth National Bank, trustee of

Pension Fund of Safety Manufacturing

Company, U/A with the company, dated

March 31, 1996, 12–3456789.

Trustees of Retirement Fund of Safety

Manufacturing Company, under directors’

resolution adopted March 31, 1996, 12–

3456789.

County Trust Company, trustee of the

Employee Savings Plan of Jones Company,

Inc., U/A dated January 17, 1996, 12–

3456789.

Trustees of the Employee Savings Plan of

Brown Brothers, Inc., U/A dated January 20,

1996, 12–3456789.

(c) The United States Treasury. A

person who desires to have a bond

become the property of the United

States upon his or her death may

designate the United States Treasury as

beneficiary.

Example: George T. Jones 123–45–6789

P.O.D. the United States Treasury.

§ 360.7 Chain letters prohibited.

The issuance of bonds in the

furtherance of a chain letter, pyramid, or

similar scheme is against the public

interest and is prohibited.

Subpart C—Limitations on Annual

Purchases

§ 360.10 Amounts which may be

purchased.

The amount of savings bonds of Series

I which may be purchased and held, in

the name of any one person in any one

calendar year, is computed according to

the provisions of § 360.11 and is limited

as follows:

(a) General annual limitation, $30,000

(par value).

(b) Special limitation, $4,000 (par

value) multiplied by the highest number

of employees participating in an eligible

employee plan, as defined in § 360.13,

at any time during the calendar year in

which the bonds are issued.

§ 360.11 Computation of amount.

(a) General. The purchases of bonds

in the name of any person in an

individual capacity are computed

separately from purchases in a fiduciary

capacity, e.g., as representative for the

estate of an individual.

(b) Bonds included in computation. In

computing the purchases for each

person, the following outstanding bonds

are included:

(1) All bonds registered in the name

and bearing the taxpayer identifying

number of that person alone;

(2) All bonds registered in the name

of the representative of the estate of that

person and bearing that person’s

taxpayer identifying number; and

(3) All bonds registered in the name

of that person as coowner that also bear

that person’s taxpayer identifying

number.

(c) Bonds excluded from computation.

In computing the purchases for each

person, the following are excluded:

(1) Bonds on which that person is

named beneficiary;

(2) Bonds to which that person has

become entitled—

(i) Under § 360.70 as surviving

beneficiary upon the death of the

registered owner;

(ii) As an heir or a legatee of the

deceased owner;

(iii) By virtue of the termination of a

trust or the happening of a similar

event; and

(3) Bonds that are purchased and

redeemed within the same calendar

year.

§ 360.12 Disposition of excess.

If any person at any time has savings

bonds issued during any one calendar

year in excess of the prescribed amount,

instructions should be obtained from

the Bureau of the Public Debt,

Parkersburg, WV 26106–1328, for

appropriate adjustment of the excess.

Under the conditions specified in

§ 360.90, the Commissioner of the

Public Debt may permit excess

purchases to stand in any particular

case or class of cases.

§ 360.13 Employee plans—Conditions of

eligibility.

(a) Definition of plan. Employee thrift,

savings, vacation, 401(k), and similar

plans are contributory plans established

by the employer for the exclusive and

irrevocable benefit of its employees or

their beneficiaries. Each plan must

afford employees the means of making

regular savings from their wages

through payroll deductions and provide

for employer contributions to be added

to these savings.

(b) Definition of terms used in this

section. (1) The term assets means all

the employees’ contributions and assets

purchased with them and the

employer’s contributions and assets

purchased with them, as well as

accretions, such as dividends on stock,

the increment in value on bonds and all

other income; but, notwithstanding any

other provision of this section, the right

to demand and receive all assets

credited to the account of an employee

shall not be construed to require the

distribution of assets in kind when it

would not be possible or practicable to

make such a distribution; for example,

Series I bonds may not be reissued in

unauthorized denominations.

(2) The word beneficiary means:

(i) The person or persons, if any,

designated by the employee in

accordance with the terms of the plan to

receive the benefits of the plan upon the

employee’s death; or

(ii) The estate of the employee.

(c) Conditions of eligibility. An

employee plan must conform to the

following rules in order to be eligible for

the special limitation provided in

§ 360.10.

(1) Crediting of assets. All assets of a

plan must be credited to the individual

accounts of participating employees and

may be distributed only to them or their

beneficiaries, except as provided in

paragraph (c)(3) of this section.

(2) Purchase of bonds. Bonds may be

purchased only with assets credited to

the accounts of participating employees

and only if the amount taken from any

account at any time for that purpose is

equal to the purchase price of a $50

bond or bonds in an authorized

denomination or denominations, and

shares in the bonds are credited to the
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38053

accounts of the individuals from which

the purchase price was derived, in

amounts corresponding with their

shares. For example, if $100 credited to

the account of John Jones is commingled

with funds credited to the accounts of

other employees to make a total of

$5,000 with which a Series I bond in the

denomination of $5,000 (face amount) is

purchased in December 1998 and

registered in the name and title of the

trustee, the plan must provide, in effect,

that John Jones’ account be credited to

show that he is the owner of a Series I

bond in the denomination of $100 (face

amount) bearing an issue date of

December 1, 1998.

(3) Irrevocable right of withdrawal.

Each participating employee has an

irrevocable right to request and receive

from the trustee all assets credited to the

employee’s account (or their value, if

the employee prefers) without regard to

any conditions other than the loss or

suspension of the privilege of

participating further in the plan. A plan

may limit or modify such right in any

manner required for qualification of the

plan under section 401 of the Internal

Revenue Code of 1986, as amended (26

U.S.C. 401).

(4) Rights of beneficiary. Upon the

death of an employee, his or her

beneficiary shall have the absolute and

unconditional right to demand and

receive from the trustee all assets

credited to the account of the employee

or their value, if he or she so prefers.

(5) Reissue or payment upon

distribution. (i) When settlement is

made with an employee or his or her

beneficiary with respect to any bond

registered in the name and title of the

plan trustee in which the employee has

a share, the bond must be paid or

reissued to the extent of the share.

(ii) If an employee or the beneficiary

is to receive distribution in kind, bonds

bearing the same issue dates as those

credited to the employee’s account will

be reissued in the name of the employee

or the employee’s beneficiary to the

extent entitled, in authorized

denominations, in any authorized form

of registration, upon the request and

certification of the trustee.

(d) Application for special limitation.

A trustee of an employee plan who

desires to purchase bonds under the

special limitation should submit to the

designated Federal Reserve Bank or

Branch a copy of:

(1) The plan;

(2) Any instructions issued under the

plan that concern Series I bonds; and

(3) The trust agreement, in order to

establish the plan’s eligibility.

(e) Vacation plans. Savings bonds

may be purchased under certain

vacation plans. Questions concerning

the eligibility of these plans to purchase

bonds in excess of the general limitation

should be addressed to the Bureau of

the Public Debt, Parkersburg, WV

26106–1328.

Subpart D—Limitations on Transfer or

Pledge

§ 360.15 Transfer.

Savings bonds are not transferable

and are payable only to the owners

named on the bonds, except as

specifically provided in these

regulations and then only in the manner

and to the extent so provided.

§ 360.16 Pledge.

A savings bond may not be

hypothecated, pledged, or used as

security for the performance of an

obligation.

Subpart E—Judicial Proceedings

§ 360.20 General.

(a) The Department of the Treasury

will not recognize a judicial

determination that gives effect to an

attempted voluntary inter vivos transfer

of a bond, or a judicial determination

that impairs the rights of survivorship

conferred by the regulations in this part

upon a coowner or beneficiary. All

provisions of this subpart are subject to

these restrictions, except as provided in

§ 360.24.

(b) The Department of the Treasury

will recognize a claim against an owner

of a savings bond and conflicting claims

of ownership of, or interest in, a bond

between coowners or between the

registered owner and the beneficiary, if

established by valid judicial

proceedings, but only as specifically

provided in this subpart. Section 360.23

specifies the evidence required to

establish the validity of the judicial

proceedings.

(c) The Department of the Treasury

and the agencies that issue, reissue, or

redeem savings bonds will not accept a

notice of an adverse claim or notice of

pending judicial proceedings, nor

undertake to protect the interests of a

litigant not in possession of a savings

bond.

§ 360.21 Payment to judgment creditors.

(a) Purchaser or officer under levy.

The Department of the Treasury will

pay (but not reissue) a savings bond to

the purchaser at a sale under a levy or

to the officer authorized under

appropriate process to levy upon

property of the registered owner or

coowner to satisfy a money judgment.

Payment will be made only to the extent

necessary to satisfy the money

judgment. The amount paid is limited to

the redemption value 60 days after the

termination of the judicial proceedings.

Except in the case of a levy by the

Internal Revenue Service, payment of a

bond registered in coownership form

pursuant to a judgment or a levy against

only one coowner is limited to the

extent of that coowner’s interest in the

bond. That interest must be established

by an agreement between the coowners

or by a judgment, decree, or order of a

court in a proceeding to which both

coowners are parties. Payment of a bond

registered in coownership form

pursuant to a levy by the Internal

Revenue Service will be made if the

levy is against either coowner on the

bond.

(b) Trustee in bankruptcy, receiver, or

similar court officer. The Department of

the Treasury will pay, at current

redemption value, a savings bond to a

trustee in bankruptcy, a receiver of an

insolvent’s estate, a receiver in equity,

or a similar court officer under the

provisions of paragraph (a) of this

section.

§ 360.22 Payment or reissue pursuant to

divorce.

(a) Divorce. (1) The Department of the

Treasury will recognize a divorce decree

that ratifies or confirms a property

settlement agreement disposing of

bonds or that otherwise settles the

interests of the parties in a bond.

Reissue of a savings bond may be made

to eliminate the name of one spouse as

owner, coowner, or beneficiary or to

substitute the name of one spouse for

that of the other spouse as owner,

coowner, or beneficiary pursuant to the

decree. However, if the bond is

registered in the name of one spouse

with another person as coowner, there

must be submitted either:

(i) A request for reissue by the other

person; or

(ii) a certified copy of a judgment,

decree, or court order entered in

proceedings to which the other person

and the spouse named on the bond are

parties, determining the extent of the

interest of that spouse in the bond.

Reissue will be permitted only to the

extent of that spouse’s interest.

(2) The evidence required under

§ 360.23 must be submitted in every

case. When the divorce decree does not

set out the terms of the property

settlement agreement, a certified copy of

the agreement must be submitted.

Payment, rather than reissue, will be

made if requested.

(b) Date for determining rights. When

payment or reissue under this section is

to be made, the rights of the parties will

be those existing under the regulations
38054 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

current at the time of the entry of the

final judgment, decree, or court order.

§ 360.23 Evidence.

(a) General. To establish the validity

of judicial proceedings, certified copies

of the final judgment, decree, or court

order, and of any necessary

supplementary proceedings, must be

submitted. If the judgment, decree, or

court order was rendered more than six

months prior to the presentation of the

bond, there must also be submitted a

certification from the clerk of the court,

under court seal, dated within six

months of the presentation of the bond,

showing that the judgment, decree, or

court order is in full force.

(b) Trustee in bankruptcy or receiver

of an insolvent’s estate. A request for

payment by a trustee in bankruptcy or

a receiver of an insolvent’s estate must

be supported by appropriate evidence of

appointment and qualification. The

evidence must be certified by the clerk

of the court, under court seal, as being

in full force on a date that is not more

than six months prior to the

presentation of the bond.

(c) Receiver in equity or similar court

officer. A request for payment by a

receiver in equity or a similar court

officer, other than a receiver of an

insolvent’s estate, must be supported by

a copy of an order that authorizes the

presentation of the bond for redemption,

certified by the clerk of the court, under

court seal, as being in full force on a

date that is not more than six months

prior to the presentation of the bond.

§ 360.24 Payment pursuant to judicial or

administrative forfeiture.

(a) Definitions. As used in this part:

(1) Contact point means the

individual designated to receive

referrals from the Bureau of the Public

Debt, as provided for in this section, by

the Federal investigative agency, United

States Attorney’s Office, or forfeiting

agency specified in Public Debt Form

1522.

(2) Forfeiting agency means the

federal law enforcement agency

responsible for the forfeiture.

(3) Forfeiture. (i) Administrative

forfeiture means the process by which

property may be forfeited by a federal

agency rather than through judicial

proceedings.

(ii) Judicial forfeiture means either a

civil or a criminal proceeding in a

United States District Court that may

result in a final judgment and order of

forfeiture.

(4) Public Debt Form 1522 means the

written notification of the forfeiture

provided by the forfeiting agency to the

Bureau of the Public Debt on a Public

Debt Form 1522 SPECIAL FORM OF

REQUEST FOR PAYMENT OF UNITED

STATES SAVINGS AND RETIREMENT

SECURITIES WHERE USE OF A

DETACHED REQUEST IS

AUTHORIZED. Public Debt Form 1522

must specify: the contact point; the

issue date of each bond; the serial

number for each bond; the date of

forfeiture; the forfeiture fund to which

payment is to be made; and be signed

by an individual authorized by the

forfeiting agency. The forfeited bonds

and the completed Public Debt Form

1522 are to be mailed to the Department

of the Treasury, Bureau of the Public

Debt, Parkersburg, WV 26106–1328.

(b) Forfeiture of bond. (1) Upon

receipt and review of the Public Debt

Form 1522, as described in paragraph

(a)(4) of this section, the Bureau of the

Public Debt will make payment to the

forfeiture fund specified on the form.

(2) The Bureau of the Public Debt will

record the forfeiture, the forfeiture fund

into which the proceeds were paid, the

contact point, and any related

information.

(3) The Bureau of the Public Debt will

rely exclusively upon the information

provided by the Federal agency in the

Public Debt Form 1522 and will not

make any independent evaluation of the

validity of the forfeiture order, the

request for payment, or the authority of

the individual signing the request for

payment.

(4) The amount paid is limited to the

redemption value of the savings bonds

as of the date of forfeiture specified in

the Public Debt Form 1522.

(c) Inquiry from previous owner. (1)

Upon payment made pursuant to

paragraph (b) of this section, all

inquiries from the previous owner,

including requests for payment, reissue,

or applications for relief, related to

forfeited savings bonds, will be referred

by the Bureau of the Public Debt to the

contact point named in the Public Debt

Form 1522.

(2) The Bureau of the Public Debt will

notify the submitter of the inquiry of the

referral to the contact point.

(3) The Bureau of the Public Debt will

not investigate the inquiry and will

defer to the forfeiting agency’s

determination of the appropriate course

of action, including settlement where

appropriate. Any settlement will be paid

from the forfeiture fund into which the

proceeds were deposited.

Subpart F—Relief for Loss, Theft,

Destruction, Mutilation, Defacement, or

Nonreceipt of Bonds

§ 360.25 General.

Relief, by the issue of a substitute

bond or by payment, is authorized for

the loss, theft, destruction, mutilation,

or defacement of a bond after receipt by

the owner or his or her representative.

As a condition for granting relief, the

Commissioner of the Public Debt, as

designee of the Secretary of the

Treasury, may require a bond of

indemnity, in the form, and with the

surety, or security, he or she considers

necessary to protect the interests of the

United States. In all cases, the claimant

or claimants must identify the lost,

stolen, destroyed, mutilated, or defaced

savings bond or savings bonds by serial

number or serial numbers and must

submit satisfactory evidence of the loss,

theft, or destruction, or a satisfactory

explanation of the mutilation or

defacement.

§ 360.26 Application for relief; after receipt

of bond.

(a) If the serial numbers of the lost,

stolen, or destroyed bonds are known,

the claimant should execute an

application for relief on the appropriate

form and submit it to the Bureau of the

Public Debt, Parkersburg, WV 26106–

1328.

(b) If the bond serial numbers are not

known, the claimant must provide

sufficient information to enable the

Bureau of the Public Debt to identify the

bond by serial number. See § 360.29(c).

The Bureau will furnish the proper

application form and instructions.

(c) A defaced bond and all available

fragments of a mutilated bond should be

submitted to a Federal Reserve Office

listed in § 360.1(b)(2) or the Bureau of

the Public Debt.

(d) The application must be made by

the person or persons (including both

coowners, if living) authorized under

the regulations in this part to request

payment of the bond. In addition:

(1) If the bond is in beneficiary form

and the owner and beneficiary are both

living, the application must be made by

the owner, and the beneficiary may also

be required to join in the application to

protect the interests of the United

States.

(2) If a minor named on a bond as

owner, coowner, or beneficiary is not of

sufficient competency and

understanding to request payment, the

parents or other person authorized to

request payment under § 360.63 will

ordinarily be required to join in the

application.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38055

(e) If the application is approved,

relief will be granted either by the

issuance of a bond bearing the same

issue date as the bond for which the

claim was filed or by the issuance of a

remittance in payment.

§ 360.27 Application for relief; nonreceipt

of bond.

If a bond issued on any transaction is

not received, the issuing agent must be

notified as promptly as possible and

given all information available about the

nonreceipt. An appropriate form and

instructions will be provided. If the

application is approved, relief will be

granted by the issuance of a bond

bearing the same issue date as the bond

that was not received. Also, relief is

authorized for the issuance of bonds for

which the Secretary has not received

payment, in order to preserve public

confidence in dealing with issuing

agents.

§ 360.28 Recovery or receipt of bond

before or after relief is granted.

(a) If a bond reported lost, stolen,

destroyed, or not received, is recovered

or received before relief is granted, the

Bureau of the Public Debt, Parkersburg,

WV 26106–1328, must be notified

promptly.

(b) A bond for which relief has been

granted is the property of the United

States and, if recovered, must be

promptly submitted to the Bureau of the

Public Debt, Parkersburg, 26106–1328,

for cancellation.

§ 360.29 Adjudication of claims.

(a) General. The Bureau of the Public

Debt will adjudicate claims for lost,

stolen or destroyed bonds on the basis

of records created and regularly

maintained in the ordinary course of

business.

(b) Claims filed 10 years after

payment. Any claim filed 10 years or

more after the recorded date of

redemption or other retirement will be

barred.

(c) Claims filed 10 years after

maturity. Any claim filed 10 years or

more after the maturity of a savings

bond will be barred.

Subpart G—General Provisions for

Payment

§ 360.35 Payment (redemption).

(a) General. Payment of a Series I

savings bond will be made to the person

or persons entitled under the provisions

of the regulations in this part, except

that the redemption payment will not be

delivered to addresses in areas with

respect to which the Department of the

Treasury restricts or regulates the

delivery of remittances, including

checks and electronic payments, drawn

against funds of the United States. See

Department of the Treasury Circular No.

655, current revision (31 CFR part 211).

Payment will be made without regard to

any notice of adverse claims to a bond

and no stoppage or caveat against

payment of a bond will be entered.

(b) Mandatory initial holding period.

A Series I bond will be paid at any time

after six months from issue date at the

current redemption value determined in

the manner described in Department of

the Treasury Circular, Public Debt

Series No. 1–98 (31 CFR part 359).

§ 360.36 Payment during life of sole

owner.

A savings bond registered in single

ownership form (i.e., without a coowner

or beneficiary) will be paid to the owner

during his or her lifetime upon

surrender with an appropriate request.

§ 360.37 Payment during lives of both

coowners.

A savings bond registered in

coownership form will be paid to either

coowner upon surrender with an

appropriate request, and upon payment

(as determined in § 360.43), the other

coowner will cease to have any interest

in the bond. If both coowners request

payment, the payment will be made in

the form, ‘‘John A. Jones AND Mary C.

Jones’’.

§ 360.38 Payment during lifetime of owner

of beneficiary bond.

A savings bond registered in

beneficiary form will be paid to the

registered owner during his or her

lifetime upon surrender with an

appropriate request. Upon payment (as

determined in § 360.43) the beneficiary

will cease to have any interest in the

bond.

§ 360.39 Surrender for payment.

(a) Procedure for definitive bonds of

Series I presented at authorized paying

agents. The owner, coowner, or other

person entitled to payment of a

definitive Series I bond may present the

bond to an authorized paying agent for

redemption. The presenter must

establish his or her identity and

entitlement to payment in accordance

with Treasury instructions and

identification guidelines. The presenter

must sign the request for payment on

the bond or, if authorized, on a separate

detached request, and add his or her

address. If the request for payment has

been signed, or signed and certified,

before presentation of the bond, the

paying agent must be satisfied that the

person presenting the bond for payment

is the owner, coowner, or other person

entitled to payment, and may require

the person to sign the request for

payment again. If the bond is in order

for payment, the paying agent will make

payment at the current redemption

value without charge to the presenter.

Paying agents are not authorized to

process any case involving partial

redemption.

(b) Procedure for all other cases. In

the case of definitive bonds to which the

procedure in paragraph (a) of this

section, does not apply, or if otherwise

preferred, the owner or coowner, or

other person entitled to payment should

establish his or her identity to the

satisfaction of an officer authorized by

the regulations in this part to certify

requests for payment, sign the requests

for payment, and provide delivery

information for the payment. The bonds

must be forwarded to a designated

Federal Reserve Bank or Branch or the

Bureau of the Public Debt. Usually,

payment will be expedited by

submission to a designated Federal

Reserve Bank or Branch. In all cases, the

cost and risk of presentation of a bond

will be borne by the owner. Payment

will be made to the registered owner or

other person entitled and will be

delivered according to the instructions

of the owner or the other person entitled

and the regulations in this part.

(c) Date of request. Requests executed

more than six months before the date of

receipt of a bond for payment will not

be accepted. Neither will a bond be

accepted if payment is requested as of

a date more than three months in the

future.

§ 360.40 Special provisions for payment.

(a) Owner’s signature not required. A

bond may be paid by a paying agent or

a designated Federal Reserve Bank or

Branch without the owner’s signature to

the request for payment if the bond

bears the special endorsement of a

paying agent specifically qualified to

place such an endorsement on savings

bonds.

(b) Signature by mark. A signature by

mark (X) must be witnessed by at least

one disinterested person and a

certifying officer. See subpart I of this

part. The witness must attest to the

signature by mark substantially as

follows: ‘‘Witness to signature by mark’’,

followed by his or her signature and

address.

(c) Name change. If the name of the

owner, coowner, or other person

entitled to payment, as it appears in the

registration or in any related evidence or

documents has been changed in any

legal manner, the signature to the

request for payment must show both

names and the manner in which the

change was made; for example, ‘‘Mary
38056 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

T. Jones Smith (Mary T. J. Smith or

Mary T. Smith) changed by marriage

from Mary T. Jones’’, or ‘‘John R. Young,

changed by order of court from Hans R.

Jung’’. See § 360.50.

(d) Attorneys-in-fact. A request for

payment executed by an attorney-in-fact

on behalf of the bond owner or other

person entitled to payment of the bond

will be recognized if it is accompanied

by a copy of the power of attorney

which meets the following

requirements:

(1) The power of attorney must bear

the grantor’s signature, properly

certified or notarized, in accordance

with applicable State law;

(2) The power of attorney must grant,

by its terms, authority for the attorneyin-fact to sell or redeem the grantor’s

securities, sell his or her personal

property, or otherwise contain similar

authority; and

(3) In the case of a grantor who has

become incapacitated, the power of

attorney must conform with pertinent

provisions of State law concerning its

durability. Generally, in such

circumstances, the power of attorney

should provide that the authority

granted will not be affected by the

subsequent incompetence or incapacity

of the grantor. Medical evidence or

other proof of the grantor’s condition

may be required in any case.

§ 360.41 Partial redemption.

A bond may be redeemed in part at

current redemption value, but only in

amounts corresponding to authorized

denominations, upon surrender of the

bond to a designated Federal Reserve

Bank or Branch or to the Bureau of the

Public Debt in accordance with

§ 360.39(b). In any case in which partial

redemption is requested, the phrase ‘‘to

the extent of $ lll (face amount) and

reissue of the remainder’’ should be

added to the request. Upon partial

redemption of the bond, the remainder

will be reissued as of the original issue

date, as provided in subpart H of this

part.

§ 360.42 Nonreceipt or loss of remittance

issued in payment.

If a remittance in payment of the

redemption value of a bond surrendered

for redemption is not received within a

reasonable time or is lost after receipt,

notice should be given to the same

agency to which the bond was

surrendered for payment. The notice

should give the date the bond was

surrendered for payment and describe

the bond by series, denomination, serial

number, and registration, including the

taxpayer identifying number of the

owner.

§ 360.43 Effective date of request for

payment.

The Department of the Treasury will

treat the receipt of a bond with an

appropriate request for payment by:

(a) A Federal Reserve Bank or Branch;

(b) The Bureau of the Public Debt; or

(c) A paying agent authorized to pay

that bond, as the date upon which the

rights of the parties are fixed for the

purpose of payment.

§ 360.44 Withdrawal of request for

payment.

(a) Withdrawal by owner or coowner.

An owner or coowner, who has

surrendered a bond to a Federal Reserve

Bank or Branch or to the Bureau of the

Public Debt or to an authorized paying

agent with an appropriate request for

payment, may withdraw the request if

notice of intent to withdraw is received

by the same agency prior to payment.

(b) Withdrawal on behalf of deceased

owner or incompetent. A request for

payment may be withdrawn under the

same conditions as in paragraph (a) of

this section by the executor or

administrator of the estate of a deceased

owner or by the person or persons who

could have been entitled to the bond

under Subpart K of this part, or by the

legal representative of the estate of a

person under legal disability, unless

surrender of the bond for payment has

eliminated the interest of a surviving

coowner or beneficiary. See § 360.70(b)

and (c).

Subpart H—Reissue and

Denominational Exchange

§ 360.45 General

Reissue of a bond may be made only

under the conditions specified in these

regulations, and only at: A designated

Federal Reserve Bank or Branch, or the

Bureau of the Public Debt. Reissue will

not be made if the request is received

less than one full calendar month before

the maturity date of a bond. See 31 CFR

part 359. The request, however, will be

effective to establish ownership as

though the requested reissue had been

made.

§ 360.46 Effective date of request for

reissue.

The Department of the Treasury will

treat the receipt by: A Federal Reserve

Bank or Branch, or the Bureau of the

Public Debt of a bond and an acceptable

request for reissue as determining the

date upon which the rights of the parties

are fixed for the purpose of reissue. For

example, if the owner or either coowner

of a bond dies after the bond has been

surrendered for reissue, the bond will be

regarded as having been reissued in the

decedent’s lifetime.

§ 360.47 Authorized reissue; during

lifetime.

A bond belonging to a living

individual may be reissued in any form

of registration authorized by the

regulations in this part upon an

appropriate request under the

conditions and for the purposes

outlined in this section.

(a) Single ownership. A bond

registered in single ownership form may

be reissued:

(1) To add a coowner or beneficiary;

or

(2) To name a new owner, with or

without a coowner or beneficiary as

requested by the new owner, but only if

the previous owner and the new owner

are parties to a divorce or annulment; or

(3) To name as new sole owner the

personal trust estate created by the

previous owner or which designates as

beneficiary the previous owner.

(b) Coownership. During the lifetime

of both coowners:

(1) A coownership bond may be

reissued to name a new owner, with or

without a coowner or beneficiary as

requested by the new owner, but only if

at least one of the coowners and the new

owner are parties to a divorce or

annulment, but reissue is limited to the

extent of that coowner’s interest in the

bond (See § 360.22(a)); or

(2) To name as new sole owner the

personal trust estate created by at least

one of the coowners or which designates

as beneficiary at least one of the

coowners.

(c) Beneficiary. A bond registered in

beneficiary form may be reissued:

(1) To substitute another individual as

beneficiary; or

(2) To eliminate the beneficiary, and,

if the beneficiary is eliminated, to effect

any of the reissues authorized by

paragraph (a) of this section.

§ 360.48 Restrictions on reissue;

denominational exchange.

Reissue is not permitted solely to

change denominations.

§ 360.49 Correction of errors.

A bond may be reissued to correct an

error in registration upon appropriate

request supported by satisfactory proof

of the error.

§ 360.50 Change of name.

An owner, coowner, or beneficiary

whose name is changed by marriage,

divorce, annulment, order of court, or in

any other legal manner after the issue of

the bond should submit the bond with

a request for reissue to substitute the

new name for the name inscribed on the

bond. Documentary evidence may be

required in any appropriate case.
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38057

§ 360.51 Requests for reissue.

Subject to the conditions set out in

this subpart, a request for reissue of

bonds in coownership form must be

signed by both coowners, except that a

request solely to eliminate the name of

one coowner may be signed by that

coowner only. A bond registered in

beneficiary form may be reissued upon

the request of the owner, without the

consent of the beneficiary. Public Debt

forms are available for requesting

reissue.

Subpart I—Certifying Officers

§ 360.55 Individuals authorized to certify.

The following individuals are

authorized to act as certifying officers

for the purpose of certifying a request

for payment, reissue, or a signature to a

Public Debt form:

(a) Officers generally authorized—(1)

Banks, trust companies, and member

organizations of the Federal Home Loan

Bank System. (i) Any officer of a bank

incorporated in the United States, the

territories or possessions of the United

States, or the Commonwealth of Puerto

Rico.

(ii) Any officer of a trust company

incorporated in the United States, the

territories or possessions of the United

States, or the Commonwealth of Puerto

Rico.

(iii) Any officer of an organization

that is a member of the Federal Home

Loan Bank System. This includes

Federal savings and loan associations.

(iv) Any officer of a foreign branch or

domestic branch of an institution

indicated in paragraphs (a)(1)(i) through

(iii) of this section.

(v) Any officer of a Federal Reserve

Bank, a Federal Land Bank, or a Federal

Home Loan Bank.

(vi) Any employee of an institution in

paragraphs (a)(1)(i) through (v) of this

section, who is expressly authorized to

certify by the institution.

(2) Credit unions. Any officer or

employee of a credit union, who is

expressly authorized to certify by the

institution. Certification by these

officers or designated employees must

be authenticated by a legible imprint of

either the corporate seal of the

institution or of the issuing or paying

agent’s stamp. The employee expressly

authorized to certify by an institution

must sign his or her name over the title

‘‘Designated Employee’’.

(3) Issuing and paying agents. Any

officer or expressly authorized

employee of an organization that is not

included in paragraphs (a)(1)(i) through

(v) of this section but is qualified as an

issuing or paying agent for savings

bonds of Series E, EE, or I. The agent’s

stamp must be imprinted in the

certification.

(4) By United States officials. Any

judge, clerk, or deputy clerk of a United

States court, including United States

courts for the territories and possessions

of the United States and the

Commonwealth of Puerto Rico; any

United States Commissioner, United

States Attorney, or United States

Collector of Customs, including their

deputies; in the Internal Revenue

Service, any Regional Commissioner,

District Director, Service Center

Director, or Internal Revenue agent.

(b) Officers with limited authority—(1)

In the Armed Forces. Any

commissioned officer or warrant officer

of the Armed Forces of the United

States, but only for members of the

respective services, their families, and

civilian employees at posts, bases, or

stations. The certifying officer must

indicate his or her rank and state that

the individual signing the request is one

of the class whose request the certifying

officer is authorized to certify.

(2) Veterans Administration, Federal

penal institutions, and United States

Public Health Service hospitals. Any

officer in charge of a home, hospital or

other facility of the Veterans

Administration, but only for the

patients, or employees of the facility;

any officer of a Federal penal institution

or a United States Public Health Service

hospital expressly authorized to certify

by the Secretary of the Treasury or his

designee, but only for the inmates,

patients or employees of the institution

involved. Officers of Veterans

Administration facilities, Federal penal

institutions, and Public Health Service

hospitals must use the stamp or seal of

the particular institution or service.

(c) Authorized officers in foreign

countries. Any United States diplomatic

or consular representative, or the officer

of a foreign branch of a bank or trust

company incorporated in the United

States whose signature is attested by an

imprint of the corporate seal or is

certified to the Department of the

Treasury. If none of these individuals is

available, a notary public or other

officer authorized to administer oaths

may certify, but, if not in a country that

is a party to the Hague Convention, his

or her official character and jurisdiction

must be certified by a United States

diplomatic or consular officer under

seal of his or her office.

(d) Authorized officers in particular

localities. The Governor and the

Treasurer of Puerto Rico; the Governor

and the Commissioner of Finance of the

Virgin Islands; the Governor and the

Director of Finance of Guam; or the

Governor and the Director of

Administrative Services of American

Samoa.

(e) Special provisions. If no certifying

officer is readily accessible, the

Commissioner of the Public Debt,

Deputy Commissioner, any Assistant

Commissioner, or other designated

official of the Bureau or of a Federal

Reserve Bank or Branch is authorized to

make special provision for any

particular case.

§ 360.56 General instructions and liability.

(a) The certifying officer must:

(1) Require the person presenting a

bond, or an appropriate Public Debt

transaction form, to establish his or her

identity in accordance with Department

of the Treasury instructions and

identification guidelines;

(2) Place a notation on the back of the

bond or on the appropriate Public Debt

transaction form, or in a separate record,

showing exactly how identification was

established; and

(3) Affix, as part of the certification,

his or her official signature, title, seal or

issuing or paying agent’s stamp,

address, and the date of execution.

(b) The certifying officer and, if such

person is an officer or an employee of

an organization, the organization will be

held fully responsible for the adequacy

of the identification.

(c) A signature guaranteed stamp

under the Securities Transfer Agents

Medallion Program (STAMP) is an

acceptable official seal.

§ 360.57 When a certifying officer may not

certify.

Certifying officers may not certify the

requests for payment or reissue of

bonds, or appropriate Public Debt

transaction forms if, in their own right

or in a representative capacity, they:

(a) Have an interest in the bonds; or

(b) Will, by virtue of the requests

being certified, acquire an interest in the

bonds.

§ 360.58 Forms to be certified.

When required in the instructions on

a Public Debt transaction form, the form

must be signed before an authorized

certifying officer.

Subpart J—Minors, Incompetents,

Aged Persons, Absentees, et al.

§ 360.60 Payment to representative of an

estate.

(a) The representative of an estate of

an owner who is a minor, an aged

person, incompetent, absentee, et al.,

may receive payment upon request:

(1) If the registration shows the name

and capacity of the representative;

(2) If the registration shows the

capacity but not the name of the
38058 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

representative and the request is

accompanied by appropriate evidence;

or

(3) If the registration includes neither

the name of the representative nor his

or her capacity but the request is

accompanied by appropriate evidence.

(b) (1) Appropriate evidence for

paragraphs (a) (2) and (3) of this section

includes Public Debt Forms 5385

(redemption) and 5386 (reissue)

completed and signed by the

representative in accordance with the

proper form’s instructions, which are

incorporated herein, or a certified copy

of the letters of appointment or, if the

representative is not appointed by a

court, other proof of qualification.

(2) Except in the case of corporate

fiduciaries, the evidence must show that

the appointment is in full force and be

dated not more than one year prior to

the presentation of the bond for

payment. The request for payment

appearing on the back of a bond must

be signed by the representative as such,

for example, ‘‘John S. Jones, guardian

(committee) of the estate of Henry W.

Smith, a minor (an incompetent)’’.

§ 360.61 Payment after death.

After the death of the ward, and at

any time prior to the representative’s

discharge, the representative of the

estate will be entitled to obtain payment

of a bond to which the ward was solely

entitled.

§ 360.62 Payment to minor.

If the owner of a savings bond is a

minor and the form of registration does

not indicate that there is a

representative of the minor’s estate,

payment will be made to the minor

upon his or her request, provided the

minor is of sufficient competency to

sign the request for payment and to

understand the nature of the

transaction. In general, the fact that the

request for payment has been signed by

a minor and certified will be accepted

as sufficient proof of competency and

understanding.

§ 360.63 Payment to a parent or other

person on behalf of a minor.

(a) If the owner of a savings bond is

a minor and the form of registration

does not indicate that there is a

representative of his or her estate, and

if the minor is not of sufficient

competency to sign the request for

payment and to understand the nature

of the transaction, payment will be

made to either parent with whom the

minor resides or to whom legal custody

has been granted. If the minor does not

reside with either parent, payment will

be made to the person who furnishes the

chief support for the minor.

(b) The request must appear on the

back of the bond in one of the following

forms:

(1) Request by parent:

I certify that I am the mother of John C.

Jones (with whom he resides) (to whom legal

custody has been granted). He is ll years

of age and is not of sufficient understanding

to make this request.

Mary Jones on behalf of John C. Jones

(2) Request by other person:

I certify that John C. Jones does not reside

with either parent and that I furnish his chief

support. He is ll years of age and is not

of sufficient understanding to make this

request.

Alice Brown, grandmother, on behalf of John

C. Jones

§ 360.64 Payment or reinvestment—

voluntary guardian of an incapacitated

person.

(a) Payment of bonds. (1) When an

adult owner of bonds is incapable of

requesting payment as a result of

incapacity and there is no other person

legally qualified to do so, the relative, or

other person, responsible for the

owner’s care and support may submit an

application for recognition as voluntary

guardian for the purpose of redeeming

the owner’s bonds, if the total

redemption value of all of the owner’s

bonds does not exceed $20,000. The

bonds and application should be

submitted to a designated Federal

Reserve Bank or the Bureau of the

Public Debt.

(2) The redemption value of the bonds

shall be determined as of the date the

bonds are received, accompanied by an

appropriate request for payment. If the

total redemption value exceeds $20,000,

a legal representative must be

appointed, as set forth in § 360.60.

(b) Reinvestment of bonds. (1) If the

bonds have matured and ceased earning

interest, they may be redeemed and the

proceeds reinvested in any other savings

bonds available. The new bonds must be

registered in the name of the

incapacitated person, followed by words

showing that he or she is under

voluntary guardianship; for example,

‘‘John Jones 123–45–6789, under

voluntary guardianship’’. A living

coowner or beneficiary named on the

matured bonds must be designated on

the new bonds, unless such person

furnishes a certified statement

consenting to omission of his or her

name.

(2) If an amount insufficient to

purchase an additional bond of any

authorized denomination of savings

bond remains after the reinvestment, the

voluntary guardian may furnish

additional funds sufficient to purchase

another savings bond of the lowest

available denomination. If additional

funds are not furnished, the remaining

amount will be paid to the voluntary

guardian for the use and benefit of the

incapacitated person.

§ 360.65 Reissue.

A bond on which a minor or other

person under legal disability is named

as the owner or coowner, or in which

he or she has an interest, may be

reissued under the following conditions,

but only in accordance with subpart H

of this part:

(a) A minor for whose estate no

representative has been appointed may

request reissue if the minor is of

sufficient competency to sign his or her

name to the request and to understand

the nature of the transaction.

(b) Except to the extent provided in

paragraph (a) of this section, reissue will

be restricted to a form of registration

which does not adversely affect the

existing ownership or interest of a

minor or other person under legal

disability. Requests for reissue should

be executed by the person authorized to

request payment under §§ 360.60 and

360.63, or the person who may request

recognition as voluntary guardian under

§ 360.64.

Subpart K—Deceased Owner, Coowner

or Beneficiary

§ 360.70 General rules governing

entitlement.

The rules in this section govern

ownership or entitlement where one or

both of the persons named on a bond

have died without the bond having been

surrendered for payment or reissue.

Proof of death may be in the form of a

properly completed Public Debt Form or

death certificate, or other evidence as

required by the Bureau of the Public

Debt.

(a) Single owner bond. If the owner of

a bond registered in single ownership

form has died, the bond becomes the

property of that decedent’s estate, and

payment or reissue will be made as

provided in this subpart.

(b) Coowner bond—(1) One coowner

deceased. If one of the coowners named

on a bond has died, the surviving

coowner will be recognized as the sole

and absolute owner, and payment or

reissue will be made as though the bond

were registered in the name of the

survivor alone. Any request for reissue

by the surviving coowner must be

supported by proof of death of the other

coowner.

(2) Both coowners deceased. If both

coowners named on a bond have died,

the bond becomes the property of the

estate of the coowner who died last, and
Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations 38059

payment or reissue will be made as if

the bond were registered in the name of

the last deceased coowner alone. Proof

of death of both coowners will be

required to establish the order of death.

(3) Simultaneous death of both

coowners. If both coowners die under

conditions where it cannot be

established, either by presumption of

law or otherwise, which coowner died

first, the bond becomes the property of

the estates of both equally, and payment

or reissue will be made accordingly.

(c) Beneficiary bond—(1) Owner

deceased. If the owner of a bond

registered in beneficiary form has died

and is survived by the beneficiary, upon

proof of death of the owner, the

beneficiary will be recognized as the

sole and absolute owner of the bond.

Payment or reissue will be made as

though the bond were registered in the

survivor’s name alone. A request for

payment or reissue by the beneficiary

must be supported by proof of death of

the owner.

(2) Beneficiary deceased. If the

beneficiary’s death occurs before, or

simultaneously with, that of the

registered owner, payment or reissue

will be made as though the bond were

registered in the owner’s name alone.

Proof of death of the owner and

beneficiary is required to establish the

order of death.

(d) Nonresident aliens. If the person

who becomes entitled to a bond because

of the death of an owner is an alien who

is a resident of an area with respect to

which the Department of the Treasury

restricts or regulates the delivery of

remittances, including checks and

electronic payments, drawn against

funds of the United States or its

agencies or instrumentalities, delivery

of the redemption payment will not be

made so long as the restriction applies.

See Department of the Treasury Circular

No. 655, current revision (31 CFR part

211).

§ 360.71 Estate administered.

(a) During administration. The courtappointed or otherwise legally qualified

representative of an estate may request

payment of bonds, including any bond

redemption proceeds, that are the

property of the estate or may have the

bonds reissued in the names of persons

entitled to share in the estate. The

representative should use the procedure

and Public Debt Form referred to in

§ 360.72 to request payment or reissue.

The representative’s request may

instead be supported by evidence of

authority in the form of a court

certificate or a certified copy of the

representative’s letters of appointment

which must be dated within six months

of the date of presentation of the bond,

unless the evidence shows that the

appointment was made within one year

prior to presentation of the bond.

(b) After administration. If the

decedent’s estate has been settled

through judicial proceedings, bonds,

including any bond redemption

proceeds, that are the estate’s property,

will be paid, or the bonds will be

reissued, upon the request of persons

entitled. Persons entitled should use the

procedure and the Public Debt Form

referred to in § 360.72 to request

payment or reissue. A request by

persons entitled may be supported by a

certified copy of the court-approved

final account for the estate, the court’s

decree of distribution, or other pertinent

court records.

§ 360.72 Procedures for the payment or

reissue of bonds that are property

belonging to a decedent’s estate.

(a) If bonds are the property of the

estate of a decedent in accordance with

§ 360.70, the bonds and any redemption

proceeds shall be paid, or the bonds

shall be reissued, in accordance with

the rules in this part, pursuant to an

appropriate request.

(b) Bonds shall be reissued or

proceeds distributed in the following

order of precedence:

(1) To the court-appointed or

otherwise legally qualified

representative of the last deceased bond

registrant’s estate;

(2) To the persons entitled after the

estate of the last deceased bond

registrant has been settled, and the court

has discharged the representative;

(3) To the persons entitled to share in

the estate of the last deceased bond

registrant’s estate in accordance with

State law relating to summary

settlement of decedents’ estates or

settlement of small estates of decedents

when no representative has been

appointed by the court and none is to

be appointed;

(4) To the surviving spouse if no

representative has been appointed by

the court, none is to be appointed, and

there is no surviving child or

descendant of a deceased child of the

decedent;

(5) To the surviving spouse to the

extent of one-half and the child or

children of the decedent, and the

descendants of deceased children by

representation, to the extent of one-half

if there are both a surviving spouse and

a child, children, or descendants of

deceased children, no representative has

been appointed by the court, and none

is to be appointed, or by the agreement

of all the persons entitled in this class;

(6) To the child or children of the

decedent, and the descendants of

deceased children by representation, if

there is no surviving spouse, no

representative has been appointed by

the court, and none is to be appointed;

(7) To the parents if none of the

above;

(8) To the brothers and sisters and

descendants of deceased brothers and

sisters by representation if none of the

above;

(9) To other next-of-kin as determined

by the laws of the domicile at the time

of death if none of the above;

(10) To persons related to the

decedent by marriage, i.e., heirs of a

spouse of the last deceased registrant

where such spouse predeceased that

registrant, if none of the above;

(11) To the person who paid the

burial and funeral expenses, or a

creditor of the decedent’s estate, but

payment may be made only to the extent

and to the proportion the person has not

been reimbursed, and reissue will not be

permitted, if none of the above;

(12) Escheat.

(c) Payments made pursuant to this

section shall be made as set out in

paragraph (b) of this section either to a

person individually, or individually and

for the account of other persons entitled

of the same class. A person receiving

payment of bond proceeds individually

and for the account of other persons

shall agree, and be obligated, to make

fair and proper distribution of such

proceeds to such other persons. The

provisions of this section are for the

convenience of the Department of the

Treasury and do not purport to

determine ownership of the bonds or of

their proceeds. The Department of the

Treasury, Bureau of the Public Debt,

Federal Reserve Banks, and any

authorized paying agents may rely on

the information provided by the person

who requests payment or reissue, and

shall not be liable for any action taken

as set out in this section, in accordance

with the information so furnished.

Subpart L—Fiduciaries

§ 360.75 Payment or reissue during the

existence of the fiduciary estate.

(a) Request from the fiduciaries

named in the registration. A request for

reissue or payment signed by at least

one, but less than all, of the fiduciaries

named in the registration shall be

deemed sufficient and acceptable proof

that less than all of the fiduciaries may

properly execute the request. If the

fiduciaries named in the registration are

still acting, no further evidence will be

required. In other cases, i.e., cases in

which the fiduciary is not designated by
38060 Federal Register / Vol. 63, No. 134 / Tuesday, July 14, 1998 /Rules and Regulations

name and title in the bond registration

or a fiduciary designated in the bond

registration is no longer acting, the

request must be made in accordance

with Subparts J and K of this part.

(b) Corporate fiduciaries. If a bond is

registered in the name of a public or

private corporation, such as a financial

institution, or a governmental body as

fiduciary, the request must be signed by

an authorized officer in the name of the

organization as fiduciary. Ordinarily, a

signed and certified request will be

accepted without further evidence.

(c) Trustee of a common trust fund. A

bond held by a financial institution as

a trustee may be reissued in the name

of the institution as trustee of its

common trust fund to the extent that

participation in the common trust fund

is authorized by law or regulation. The

request for reissue should be executed

by the institution and any co-trustee.

(d) Successor fiduciary. If the

fiduciary in whose name the bond is

registered has been replaced by another

fiduciary, a properly executed form or

satisfactory evidence of successorship

should be furnished.

§ 360.76 Payment or reissue after

termination of the fiduciary estate.

A bond registered in the name or title

of a fiduciary may be paid or reissued

to the person who has become entitled

by reason of the termination of an estate,

other than a decedent’s estate (see

Subpart K of this part). Requests for

reissue made by a fiduciary pursuant to

the termination of a fiduciary estate

should be made on the appropriate

form. Requests for payment or reissue

by other than the fiduciary must be

accompanied by evidence to show that

the person has become entitled in

accordance with applicable State law or

otherwise. When two or more persons

have become entitled, the request for

payment or reissue must be signed by

each of them.

Subpart M—Miscellaneous Provisions

§ 360.90 Waiver of regulations.

The Commissioner of the Public Debt,

as designee of the Secretary of the

Treasury, may waive or modify any

provision or provisions of the

regulations in this part. He or she may

do so in any particular case or class of

cases for the convenience of the United

States or in order to relieve any person

or persons of unnecessary hardship:

(a) If such action would not be

inconsistent with law or equity;

(b) If it does not impair any material

existing rights; and

(c) If he or she is satisfied that such

action would not subject the United

States to any substantial expense or

liability.

§ 360.91 Additional requirements; bond of

indemnity.

The Commissioner of the Public Debt,

as designee of the Secretary of the

Treasury, may require:

(a) Such additional evidence as he or

she may consider necessary or

advisable; or

(b) A bond of indemnity, with or

without surety, in any case in which he

or she may consider such a bond

necessary for the protection of the

interests of the United States.

§ 360.92 Supplements, amendments, or

revisions.

The Secretary of the Treasury may at

any time, or from time to time, prescribe

additional, supplemental, amendatory,

or revised rules and regulations

governing United States Savings Bonds.

[FR Doc. 98–18621 Filed 7–8–98; 4:13 pm]

BILLING CODE 4810–39–P