Payroll Savings Plan enables employees to buy US savings bonds through payroll deductions. Each participant sets away money from their wage & employer buys a bond on their behalf.
Under Plan employees can invest a portion of their paycheck in Series EE and Series I. These bonds earn interest over time & can be redeemed for their face value plus accrued interest.
US Payroll Savings Plan is available to any individual who is a United States citizen, a resident or a U.S. government employee, regardless of their citizenship status.
The interest earned on savings bonds is exempt from state and local taxes, and may also be exempt from federal taxes, if the bonds are used to pay for qualified higher education expenses.
After holding a savings bond for a year, you can cash it in at any time, but if you do so before five years have passed, you will lose the final three months' interest.
Payroll Savings Plan is the convenience of automatic payroll deductions. By investing a small amount each paycheck, employees can build up a significant savings over time.