Personal Finance Q & A

Coming to terms with T-bills and Treasury bonds

Q. What's the difference between Treasury bonds and T-bills? Where can I purchase them? And is it possible to move mutual-fund investments into bank CDs or T-bills? Susan Sincich, via e-mail

A. Treasury bills, which come in denominations of $10,000, mature in 3 months, 6 months or 1 year. Treasury bonds, which come in denominations of $1,000, mature in 30 years.

You can buy them through the mail (for information, write to Bureau of the Public Debt, 1300 C St., SW, Washington DC 20239-0001), or by calling Treasury Direct, at 202-874-4000.

Or, click on its Web site at:

www.publicdebt.treas.gov.

You could also cash out your mutual funds and move the assets into bank CDs or a T-bill. Another option is to roll over your stock mutual fund into a US government bond fund. But be forewarned: You could incur taxes on such a transfer unless the all of the money is in a retirement account.

Q. Is it preferable to designate an intended survivor of Series HH savings bonds as a beneficiary or a co-owner? Except for the survivor's responsibility to pay tax on the accrued interest as the bonds are redeemed, plus annual taxes on the yearly interest, are there any other potential tax consequences for the survivor or the original purchaser for bonds worth $38,500? H.N., Annapolis, Md.

A. Whether you choose a co-owner or a beneficiary may depend on whether you will need assistance late in life, says Daniel Pederson, author of "US Savings Bonds" (313-843-1910).

If you feel you might need to tap into the savings bonds, but for some reason cannot physically get to the bonds or handle the redemption, you might want to designate the survivor as a co-owner.

Choose someone trustworthy. The co-owner can cash the savings bonds at any time.

A beneficiary can only cash the bonds after your demise. Whichever designation you use, the value of the bonds becomes part of your estate.

Whether a tax will be due depends partly on your net worth. But even if an estate tax is due because of the bonds, there may be a special tax offset, says Pederson.

To determine that, check with an attorney or accountant familiar with your financial situation and US savings bonds.

Questions about finances? Write: Guy Halverson The Christian Science Monitor 500 Fifth Ave., Suite 1845 New York, NY 10110 E-mail: halversong@csps.com