Investors face delays moving certain assets from TreasuryDirect

As investors revisit bonds amid falling interest rates, some are encountering longer waits to transfer certain assets purchased via TreasuryDirect, a platform run by the U.S. Department of the Treasury.  

TreasuryDirect, which sells government-backed assets, experienced a surge in demand in recent years as investors flooded into Series I bonds that offered record-high yields amid elevated inflation.

Now, other assets, such as Treasurys, are taking longer to transfer from TreasuryDirect to brokerage accounts. In some cases, the wait could be up to 12 months, The Wall Street Journal reported Wednesday.

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But the Treasury said wait times are improving.

“We recognize that the retail program has processing delays due to resource and technology constraints,” a spokesperson from the Treasury’s Bureau of the Fiscal Service told CNBC. 

When asked about wait times, the spokesperson said that it “depends more on complexity than capacity” and that processing times are “well under one year right now and declining daily.”

“The website’s processing timeframes are meant to give the longest potential times for the complex, difficult cases — these processing times are often much shorter and continue to decrease as we dedicate more resources,” they said. 

The agency aims to “modernize the retail program in the future” and is designing solutions “with the customer in mind,” the spokesperson said.  

In addition to savings bonds such as I bonds, TreasuryDirect offers “marketable securities,” including Treasury bills, Treasury bonds, Treasury inflation-protected securities and floating rate notes.

Investors must hold these assets for 45 days before they can sell or transfer them, which makes the platform less attractive for investors needing flexibility, experts say.

“It’s not a good idea to buy anything from TreasuryDirect that you might need to sell,” said David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates. 

Transferring assets from TreasuryDirect to a brokerage account includes a multiple-step process, including a form with a signature from an “authorized certifying official at a financial institution,” according to the website.

Some advisors recommend buying Treasury assets in a brokerage account to bypass potential liquidity issues.

“The accessibility and the ease of these exchanges is so much better than the hoops you’ve got to jump through with the Treasury,” said certified financial planner George Gagliardi, founder of Coromandel Wealth Management in Lexington, Massachusetts.

Investors pay fees to buy Treasurys in a brokerage account. But with low-fee options, like exchange-traded funds, the cost is minimal for smaller investments, Gagliardi said.