You may waive the early withdrawal penalty required by Regulation D when a CD owner dies or is declared legally incompetent, but you may not waive the required early withdrawal penalty for withdrawals related to a medical emergency. Of course, early withdrawal penalties are required only for withdrawals within the first six days after the account opening. After that, any penalties and waivers are determined by your account agreements and bank policies. While you may waive penalties and fees provided in your agreements and policies on a case by case basis, it would be prudent to document the reasons for such waivers (assuming the waivers comply with the Regulation D requirements referenced above).

For citations related to our guidance, please see below:

• Regulation D — 12 CFR 204.2(c) (required early withdrawal penalties for time deposits)
• Regulation D — 12 CFR 204.2(c), Footnote 1 (permitted waivers of required early withdrawal penalties)