The 1977 Legislature authorized implementation of a payroll deduction plan for purchase of United States savings bonds. The State of Kansas payroll savings plan permits savings bonds to be purchased by eligible employees on a partial-payment plan. An eligible employee may designate, by completing authorization forms, a fixed amount to be deducted each pay period which will be applied to the purchase of a $100, $200, $500, $1,000, $5,000 or $10,000 denomination bond.
Any dollar amount may be designated in a pay period for purchase of a $100, $200, $500, $1,000, $5,000, or $10,000 denomination savings bond, provided that such amount per pay period is not less than $5.00, nor greater than the amount of the employee's net pay, considering mandatory and other selected payroll deduction options. Note that the limitation on total purchases in any one calendar year of "Series EE" bonds which may be held by any one person at any time is $30,000 at face value.
When the purchase price of a bond has been accumulated, the Federal Reserve Bank in Kansas City, will issue the savings bond approximately 5-7 days after the first of the month following the pay period in which the final deduction is taken. The bond will be dated with the month in which the bond is written and will be mailed in penalty mail stamped envelopes to the bond owner at the address shown on the authorization form.
If an employee's bond is not received within a reasonable time at the address provided, the employee should contact the Division of Human Resources which will review the related records and, if appropriate, send a form to the employee to use in requesting a replacement bond. This procedure is also to be used for bonds which have been received but are subsequently lost or destroyed. Savings bonds are backed by the full faith and credit of the federal government; if lost, stolen, mutilated, or destroyed, they will be replaced free and bearing the original issue date.
Employees desiring confirmation of the bonds issued to them which they have not yet cashed may request such a listing from the Department of the Treasury at the following address:
U.S. Savings Bond DivisionThe current type of bond being issued is "Series EE", which is an appreciation-type security that has a face value of $100, $200, $500, $1,000, $5,000, or $10,000 and is purchased at a cost of $50, $100, $250, $500, $2,500, or $5,000 respectively. The bonds ordinarily mature in eighteen years; however, they carry extension periods beyond the original maturity.
The rate during the extension is the rate prevailing for new issues at the time the bonds enter an extension, and is guaranteed to the next maturity.
All "Series EE" bonds earn interest until final maturity, 30 years from the issue date. The amount of interest is dependent upon the issue date of the bond, the market-based interest rates, and the length of time the bond is held.
Interest accrues as outlined in the following paragraphs and is payable when a bond is cashed.
All "Series EE" bonds issued on or after November 1, 1982, earn market-based interest rates which change each May and November if held five years or longer. In addition, outstanding "Series E" and "Series EE" bonds and Savings Notes (Freedom Shares) that are still outstanding and earning interest on and after November 1, 1987, also earn market-based interest since November 1, 1982.
"Series EE" bonds issued prior to March 1, 1993, have an original maturity of 12 years with an extension of 18 years.
"Series EE" bonds issued on or after March 1, 1993, have an initial term of 18 years. These bonds will receive one 10-year and one 2- year extended maturity, at the guaranteed rates in effect when those extensions begin, for a total of 30 years.
"Series EE" bonds issued on or after March 1, 1993, that are held at least five years from the issue date pay a variable market-based rate or a guaranteed minimum yield, whichever is greater. Interest is compounded semiannually from the date of issue and accrues monthly through 18 years from issue.
Because of the continuous review of interest rates on U.S. "Series EE" savings bonds by the U.S. Treasury and possible changes in the bond earnings rates, interest computation rules are not included here. Detail interest tables are available at any bank.
A "Series EE" bond may be redeemed, without fee or commission, at any time after six months from issue date. Bonds held less than five years receive reduced interest rates based on a fixed, graduated scale.
Effective February 1, 2003:
A "Series EE" bond issued with a February 2003 or later date, cannot be redeemed until they are at least 12 months old. "Series EE" savings bonds with a February 2003 or later issue date cannot be exchanged for Series HH savings bonds until they are 12 months old.
Interest on "Series EE" bonds is exempt from state or local income taxes but is subject to federal income tax. Interest is reportable as it accrues for federal income tax purposes, or reporting may be deferred until the bonds are cashed, disposed of, or reach final maturity, whichever comes first.
Interest earned on Savings Bonds purchased after January 1, 1990, when used to pay the tuition and fees of eligible institutions of higher learning, may be completely tax free. To qualify, Bonds must be purchased by adults aged 24 or older in their own names. For more information on using Savings Bonds as "Education Bonds", contact the Division of Human Resources.
"Series EE" bonds, along with "Series E" bonds and Savings Notes, with current redemption values of $500 or more may be exchanged for current-income "Series HH" bonds. Deferred "Series EE" bond interest continues to be deferred to the tax year in which the "Series HH" bonds are redeemed, disposed of, or reach final maturity, whichever comes first.
Savings bonds issued with a surviving co-owner or beneficiary do not form part of an estate for probate purposes. However, their value must usually be included in computing the gross estate for estate tax and inheritance tax purposes.
Bonds may be issued only: 1) in the name of one person; 2) in the names of two persons, as co-owners; or 3) in the name of one person, as owner, with a second person as beneficiary (payable on death).
Designating Owner, Co-Owner, and/or Beneficiary - An employee may be the owner of the savings bond or may designate one other person as the bond owner. In the event of the designation of another person as the bond owner, the designated bond owner's social security number must be shown for the bond to be issued. The bond inscription will show the designated bond owner's name, social security number, and address, along with the name of the co-owner and/or beneficiary, if designated on the authorization form.
To designate a co-owner, the bond will be drawn in favor of the owner or co-owner. In lieu of a co-owner, the employee may designate a beneficiary, in which case the bond will be drawn in favor of the owner and will show the named beneficiary as "POD Mary K. Jones" on the face of the bond. The consent of the beneficiary to reissue is not required.
The U.S. savings bond balance report system is a computerized technique designed to keep a record of each employee's deductions, purchases, and fund balance. Since the plan allows employees to deduct a flat rate for each pay period which may or may not coincide with the purchase price of a single savings bond, the bond balance report summarizes individual employee transactions, and is printed and forwarded each month to each agency. The bond balance report contains pertinent employee information (i.e., agency, payroll number, social security number, name, bond denomination, previous balance, amount of deductions, purchases, adjustments, ending balance, and comment section) to answer employee's questions about their accounts. Employees may contact the Division of Human Resources to confirm the status of their bond balances.
When an employee terminates or separates from state service or decides to discontinue the plan and his or her bond deduction account shows a balance which is insufficient to issue a bond, the employee should complete new authorization forms and/or a bond balance refund voucher. Bond balance refund vouchers will be furnished to the employee by the Division of Accounts and Reports through the Division of Human Resources. Contact the Division of Human Resources for additional information.
Any bond deductions balance which has been inactive for a period of three months will be transferred to an inactive account file pending disposition or filing of a claim for a bond balance refund.
Additionally, a bond balance refund form will be provided to each employee whose account is inactive so that such employee may request a refund through the Division of Human Resources. In the event that such inactive accounts have not been cleared within three years, the balance in such accounts will be transferred and paid over to the State General Fund.
Contact the Division of Human Resources regarding specific procedures for persons employed in KSU's local agencies.
All classified and unclassified employees of the State of Kansas, including local agency personnel but excluding student employees, who are employed half time or more are eligible to participate in the savings bond payroll deduction program, provided the position the employee holds is not intermittent and the appointment requires 1,000 hours of work per year.
The following employees are not eligible to participate in the savings bond plan:
Seasonal or temporary employees.
Employees who work less than 1,000 hours per year.
Student employees on student payrolls.
Employees who are not actively at work (those on leave without pay) and who do not receive a paycheck cannot participate until they are entitled to receive salary or wage payment.
If both husband and wife are employed by the State of Kansas, each may participate individually in the purchase of savings bonds, but they cannot contribute jointly toward the purchase of a single savings bond; however, each may list the other as a co-owner or beneficiary of bonds purchased individually.
No employee will be allowed to have more than one account in the bond fund (i.e., an employee who works in more than one state agency and who participates in the United States "Series EE" savings bond deduction plan may not subscribe to bonds from more than one state agency even though employed in a second agency). Information regarding the State of Kansas payroll savings plan is provided to each eligible classified and unclassified employee by the Division of Human Resources upon employment and during the Annual State Bond drive.
An authorization form, which is both an application for participation and an authorization by the employee to deduct from his or her earnings the amount indicated for purchase of a savings bond in the denomination selected, must be completed for any new or current employee electing to participate in the savings bond program. This authorization form is used for enrollment, change, or cancellation of the savings bond program. A supply of the forms is available from the Division of Human Resources, 103 Edwards Hall.
The normal effective date of enrollment, change, or cancellation will be on the beginning date of the pay period for which the employee wants the deduction and/or change to begin. Authorization forms should be submitted to the Division of Human Resources by the effective date and for new employees should be submitted to the Division of Human Resources with the appointment papers.
If an employee should change from one agency to another agency the bond account will continue, subject to the completion and submission of a new authorization form, to change the agency or to cancel the authorization.
It may be necessary to correct information regarding participating employees' names, addresses or social security numbers. Such changes should be reported to the Division of Human Resources on an authorization form by the effective date of the change.
If a participating employee desires to change the payroll deduction contribution amount for purchase of United States "Series EE" savings bonds, a new authorization form should be completed and submitted to the Division of Human Resources by the effective date. All such change forms shall be dated so that the last filed "change" only will be effective.
If an employee desires to discontinue participation in the savings bond plan, an authorization form should be completed and forwarded to the Division of Human Resources by the effective date.
An employee, once enrolled may only process four authorization changes, including terminations, payroll deduction amount, denomination change, or owner, co-owner or beneficiary name change, in any calendar year.
Questions regarding enrollment in the U.S. Savings Bonds Program should be addressed to the Division of Human Resources, 103 Edwards Hall, 532-6277.
