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DoD Payroll Savings Plan Adds Inflation-keyed Series I Bonds

Special to American Forces Press Service

WASHINGTON, March 9, 2000 – Civilian employees can now buy the new inflation-indexed Series I U.S. Savings Bonds through the Payroll Savings Plan. Active and retired military members will be able to buy them beginning April 1.

The Defense Finance and Accounting Service began offering civilian workers the option March 1. The Payroll Savings Plan offers I Bonds in denominations of $50, $75, $100, $200, $500 and $1,000. Civilians and military members on the plan can buy bonds with allotments as small as $5.

The Treasury Department announces earnings rates for Series I and EE bonds on May 1 and Nov. 1. The rates are good for the following six months, but are determined entirely differently.

Series I bonds sell at face value and their special features are a guaranteed fixed base interest rate and a semiannual supplemental rate adjustment figured on the Bureau of Labor Statistics' Consumer Price Index-Urban. The fixed base rate in effect on the date of purchase is guaranteed for the bond's entire 30-year earning life. I bonds are earning 6.98 percent through April.

The familiar Series EE bonds sell for half their face value and currently earn 5.19 percent. The rate has floated with no guaranteed minimum since May 1995. The EE semiannual earnings rate is 90 percent that of prevailing five-year U.S. Treasury bonds.

Series I and EE bonds are exempt from state and local taxes and also from federal taxes if used to pay tuition and fees at qualifying schools.

Savings Bonds customarily carried the portraits of presidents and other historical figures until I bonds were introduced. Series I is the first to honor prominent, contemporary Americans and members of racial and ethnic minorities. All are deceased.

Nobel physicist Albert Einstein is on the $1,000 bond. Gen. George C. Marshall is on the $500. Chief Joseph, leader of the Nez Perce Indian tribe in the late 1800s, appears on the $200 bond. African-American civil rights leader Rev. Martin Luther King Jr. is on the $100 bond. Hispanic veterans' rights advocate Dr. Hector Garcia, founder of the American GI Forum, is on the $75 bond. Author Helen Keller, advocate of Americans with disabilities, is on the $50.

Series I bonds are also available in $5,000 and $10,000 denominations, but not through the Payroll Savings Plan. U.S. Sen. Spark M. Matsunaga, a Japanese American, is on the $10,000 bond. African-American opera star Marian Anderson is on the $5,000 bond.

For more information about Series I and other U.S. Savings Bonds, interest rates, investment tips, tax rules, and downloadable calculators and other aids, point your Internet browser to the Treasury Department's Savings Bond Web site at www.savingsbonds.gov, or write to:

U.S. Treasury Bureau of the Public Debt

Savings Bond Operations

Parkersburg, WV 26106-1328.

(Based on a news release from the Defense Finance and Accounting Service, Arlington, Va.) #END#

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