Q&A: How to cash savings bonds for children

Dear Liz: My son is trying to cash in his children’s savings bonds, which seems to be difficult. You used to be able to go to a bank to do that. Is that still possible? If not, how can you do it now?

Answer: If the bonds were electronic, they probably would be held in a special minor’s account at TreasuryDirect.gov, the government site that allows investors to buy and redeem Treasury securities. If your son was identified as the person to have authority over the account, it would be relatively easy for him to redeem them.

We’ll assume, then, that your son is dealing with paper bonds. We’ll further assume that your grandchildren are still minors and that your son is cashing these bonds for their benefit, rather than his own. Many banks are leery of cashing children’s bonds precisely because parents (or people posing as parents) may be trying to rip off their kids.

Parents are allowed to redeem a child’s paper saving bond if the child lives with that parent and is too young to sign the request for payment, according to TreasuryDirect. The parent should write the following on the back of the bond:

“I certify that I am the parent of [child’s name]. [Child’s name] resides with me / I have been granted legal custody of [child’s name]. [She / he] is ___ years old and is not of sufficient understanding to make this request.” Your son should find a bank willing to certify or guaranty his signature. Then, in the presence of the bank representative, he must sign the request with his name “on behalf of [child’s name].”

Then he can send them to Treasury Retail Securities Site, PO Box 214, Minneapolis, MN 55480-0214. If the bonds are electronic, he can log into TreasuryDirect.com and follow the instructions there. Your son can contact the U.S. Treasury at (844) 284-2676 for further details.

Q&A: Social Security benefits for children

Dear Liz: My older brothers-in-law signed up for Social Security benefits at 62 and then suspended their benefits so that their children, who were under 18, could receive 50% of their checks. Is this process still available at age 62 for those with children who are below the age of 18?

Answer: In order for family members to receive spousal or child benefits based on the primary earner’s work record, that primary earner has to be receiving his or her own benefit.

In the past, people who had reached full retirement age — which used to be 65, is now 66 and is rising to 67 — had the option of immediately suspending their applications so their family could receive benefits while their own continued to grow. The “file and suspend” option was not available to people who applied for benefits before their full retirement age. And now it’s no longer available period, thanks to Congress.

If you do apply for your benefit early, keep in mind that your checks — and your children’s checks — will be subject to the earnings test. That reduces Social Security benefits by $1 for every $2 you earn over $16,920 in 2017. (The earnings test goes away at full retirement age.) Your benefit also will be reduced to reflect the early start.

Also, there’s a limit to how much a family can receive based on the worker’s record. The family maximum can be from 150% to 180% of the parent’s full benefit amount.

If you’re still working and your children will be younger than 18 by the time you reach full retirement age, it may make sense to wait until then to apply. To know for sure, though, you should use one of the calculators that takes child benefits into account, such as MaximizeMySocialSecurity.com.

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