IBA Compliance Connection

Your go to source for compliance!

Although no longer required, we continue to enforce a six-per-month transaction limit for our savings and money market deposit accounts, and our account agreement provides that we reserve the right to require at least seven days written notice before a customer can make a withdrawal from a savings or money market deposit account. Our Truth in Savings Act (TISA) disclosure used to include this reservation of rights language, but we recently discovered that our core provider updated our TISA disclosure to remove the reservation of rights language. Are we required to include the reservation of rights language in our TISA disclosure for savings and money market deposit accounts if we still impose transaction limitations? Do we need to notify existing customers who received the disclosure with the reservation of rights language that we no longer include this language in our new TISA disclosure?

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We do not believe you are required to include the reservation of rights language in your TISA disclosure for savings and money market accounts, and we do not believe you need to notify existing customers that your new TISA disclosure no longer includes this language. Additionally, since your account agreement includes the reservation of rights language, we believe you may continue to impose a six-per-month transaction limitation on these accounts — provided the transaction limitation is included in your TISA disclosure.

Regulation DD requires TISA disclosures to include “any limitations on the number . . . of withdrawals or deposits.” However, the official commentary to Regulation DD provides that “institutions need not disclose reservations of right to require notices of withdrawals from accounts required by federal or state law.”

Although the Federal Reserve’s 2020 interim final rule removed the six-per-month transfer limit from the definition of “savings deposit,” along with the requirement that banks prevent savings deposit transfers exceeding this limit, the savings deposit definition still includes reservation of rights language. Specifically, a deposit account is an account in which the deposit contract provides that the depositor “may at any time be required by the depository institution to give written notice of an intended withdrawal not less than seven days before withdrawal is made . . .”

Since your savings and money market deposit account agreements include the reservation of rights language, we believe they meet the definition of “savings deposits” under Regulation D, and, as noted in the Federal Reserve’s Savings Deposits FAQs, you are permitted to continue enforcing the six-transfer limit. 

For resources related to our guidance, please see:

  • Regulation DD, 12 CFR 1030.4(b)(5) (“Account disclosures shall include the following, as applicable: . . . Any limitations on the number or dollar amount of withdrawals or deposits.”)
  • Regulation DD, Official Interpretations, Paragraph 4(b)(5), Comment 1(iii) (“Examples of limitations on the number or dollar amount of deposits or withdrawals that institutions must disclose are: . . . Limitations required by Regulation D of the Board of Governors of the Federal Reserve System (12 CFR part 204) on the number of withdrawals permitted from money market deposit accounts by check to third parties each month. Institutions need not disclose reservations of right to require notices for withdrawals from accounts required by federal or state law.”)
  • Regulation D: Reserve Requirements of Depository Institutions Interim Final Rule, 85 Fed. Reg. 23445, 23446 (April 28, 2020) (“Because of the elimination of reserve requirements and because of financial disruptions related to the novel coronavirus, the Board is amending Regulation D, effective immediately, to delete the six transfer limit from the ‘savings deposit’ definition. This interim final rule includes deletion of the provisions in the ‘savings deposit’ definition that require depository institutions either to prevent transfers and withdrawals in excess of the limit or to monitor savings deposits ex post for violations of the limit.”)
  • Regulation D, 12 CFR 204.2(d)(1) (“Savings deposit means a deposit or account with respect to which the depositor is not required by the deposit contract but may at any time be required by the depository institution to give written notice of an intended withdrawal not less than seven days before withdrawal is made, and that is not payable on a specified date or at the expiration of a specified time after the date of deposit. The term savings deposit includes a regular share account at a credit union and a regular account at a savings and loan association.”)
  • Federal Reserve, Savings Deposits FAQs, #7 (May 13, 2020) (“Does the interim final rule have any impact on the ‘reservation of right’ provisions set forth in section 204.2(d)(1) of Regulation D? No. The interim final rule does not have any impact on section 204.2(d)(1) of Regulation D. The ‘reservation of right’ continues to be a part of the definition of ‘savings deposit’ under the interim final rule.”)
  • Federal Reserve, Savings Deposits FAQs, #4 (May 13, 2020) (“Does the interim final rule require depository institutions to suspend enforcement of the six convenient transfer limit on accounts classified as ‘savings deposits’? No. The interim final rule permits depository institutions to suspend enforcement of the six-transfer limit, but it does not require depository institutions to do so.”)