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Payroll Savings For U.S. Savings Bonds Now Available To Virtually All Employees


August 16, 2004

The Treasury Department has added a new payroll feature to its electronic TreasuryDirect account system. As a result, nearly all employees can now make automatic payroll deductions toward the purchase of Series I or EE U.S. Savings Bonds. The new feature vastly increases the potential number of people who can buy savings bonds using payroll deductions.

Savings bonds have been offered by thousands of employers through payroll savings plans since the 1930s. However, until now employees of most small businesses, and even many larger ones, have not had the ability to purchase savings bonds through deductions from their pay.

With this new feature, if companies’ payroll systems offer voluntary deductions, their employees can opt to have a portion of their pay transferred into their TreasuryDirect accounts to purchase electronic savings bonds and, eventually, Treasury marketable securities. TreasuryDirect accounts can be established at the website

“This new payroll feature within TreasuryDirect makes it possible for most employees to allot money toward the purchase of savings bonds,” according to Van Zeck, Commissioner of the Public Debt, “even those whose employers have been unable to offer such a deduction previously.”

To purchase savings bonds by payroll deduction, employees need only establish TreasuryDirect accounts and present payroll deduction requests to their employers. The requests must identify their TreasuryDirect account and routing transit number information, and specify the dollar amounts to be deducted each payday and transferred into their accounts. (Detailed instructions are found in the TreasuryDirect account procedures, under “Manage Direct”.)

The deposited funds are held in a special non-interest bearing security called a Certificate of Indebtedness. The investor can then redeem the Certificate at any time to buy savings bonds. Employees will be able to schedule purchases to coincide with payroll deductions, thereby ensuring that they earn interest from the earliest possible date. Purchase dates can be scheduled up to five years in advance.

TreasuryDirect is an Internet accessed system that allows savers and investors to establish accounts to purchase, hold, and conduct transactions in Treasury securities online. Both Series I and EE savings bonds are now available in electronic form through TreasuryDirect, and Treasury bills, notes, and TIPS will be added to the system in the future. Paper savings bonds are not available through TreasuryDirect.