The Treasury's Department of Public Debt 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, marketable securities. TreasuryDirect accounts can be established at the website www.treasurydirect.gov.

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.

Discuss this news item in the PayPerShop Forum

...back to 4 November 2004


Further information:
www.publicdebt.treas.gov/com/compayroll.htm