We do not believe that your savings and money market accounts would automatically be considered transaction accounts if you suspend enforcement of the six-per-month transaction limitation. Although a recent interim final rule removed the transaction limitation from the definition of “savings deposit” under Regulation D, the interim final rule maintains separate definitions for savings deposits and transaction accounts. Additionally, the Federal Reserve’s Savings Deposits FAQs state that banks may continue reporting accounts as “savings deposits” on FR 2900 reports even if they suspend enforcement of the transaction limitation.

We cannot predict what effect the reinstatement of reserve requirements under Regulation D would have on savings deposits. While the Federal Reserve declined to answer whether the recent amendment to Regulation D would be temporary or permanent, it did state that it does not “have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant.”

We are not aware of other significant ramifications that could result from removing transaction limitations from your savings accounts. The Federal Reserve addressed one possible ramification in its FAQs related to the treatment of savings deposits under Regulation CC. The Federal Reserve stated that the recent amendments to Regulation D did not result in such accounts “now being covered by Regulation CC” because “Regulation CC . . . excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits),” and “accounts described in 12 CFR 204.2(d)(2) from the Reg CC ‘account’ definition.” Thus, savings deposits are still excluded from Regulation CC even though they are now included in the definition of transaction accounts.

For resources related to our guidance, please see:

• 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.

  (2) The term “savings deposit” also means: A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements in paragraph (d)(1) of this section and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor may be permitted or authorized to make transfers and withdrawals to another account (including a transaction account) of the depositor at the same institution or to a third party, regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made.

  (3) A deposit may continue to be classified as a savings deposit even if the depository institution exercises its right to require notice of withdrawal.

  (4) Savings deposit does not include funds deposited to the credit of the depository institution’s own trust department where the funds involved are utilized to cover checks or drafts. Such funds are transaction accounts.”)
   

• Regulation D, 12 CFR 204.2(e) (“Transaction account means a deposit or account from which the depositor or account holder is permitted to make transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, or other similar device for the purpose of making payments or transfers to third persons or others or from which the depositor may make third party payments at an automated teller machine (ATM) or a remote service unit, or other electronic device, including by debit card. Transaction account includes:

(1) Demand deposits;

(2) Deposits or accounts on which the depository institution has reserved the right to require at least seven days’ written notice prior to withdrawal or transfer of any funds in the account and that are subject to check, draft, negotiable order of withdrawal, share draft, or other similar item, including accounts described in paragraph (d)(2) of this section (savings deposits) and including accounts authorized by 12 U.S.C. 1832(a) (NOW accounts).

(3) Deposits or accounts on which the depository institution has reserved the right to require at least seven days’ written notice prior to withdrawal or transfer of any funds in the account and from which withdrawals may be made automatically through payment to the depository institution itself or through transfer or credit to a demand deposit or other account in order to cover checks or drafts drawn upon the institution or to maintain a specified balance in, or to make periodic transfers to such accounts, including accounts authorized by 12 U.S.C. 371a (automatic transfer accounts or ATS accounts).

(4) Deposits or accounts on which the depository institution has reserved the right to require at least seven days’ written notice prior to withdrawal or transfer of any funds in the account and under the terms of which, or by practice of the depository institution, the depositor is permitted or authorized to make withdrawals for the purposes of transferring funds to another account of the depositor at the same institution (including transaction account) or for making payment to a third party, regardless of the number of such transfers and withdrawals and regardless of the manner in which such transfers and withdrawals are made.

(5) Deposits or accounts maintained in connection with an arrangement that permits the depositor to obtain credit directly or indirectly through the drawing of a negotiable or nonnegotiable check, draft, order or instruction or other similar device (including telephone or electronic order or instruction) on the issuing institution that can be used for the purpose of making payments or transfers to third persons or others or to a deposit account of the depositor.

(6) All deposits other than time deposits, including those accounts that are time deposits in form but that the Board has determined, by rule or order, to be transaction accounts.”)

• Federal Reserve, Savings Deposit FAQs, #5 (May 13, 2020) (“May depository institutions continue to report accounts as ‘savings deposits’ on their FR 2900 reports even after they suspend enforcement of the six-transfer limit on those accounts? Yes. Depository institutions may continue to report these accounts as ‘savings deposits’ on their FR 2900 reports after they suspend enforcement of the six-transfer limit on those accounts.”)

• Federal Reserve, Savings Deposit FAQs, #6 (May 13, 2020) (“If a depository institution suspends enforcement of the six-transfer limit on a ‘savings deposit,’ may the depository institution report the account as a “transaction account” rather than as a ‘savings deposit’? Yes. If a depository institution suspends enforcement of the six-transfer limit on a ‘savings deposit,’ the depository institution may report that account as a ‘transaction account’ on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a ‘savings deposit.’”)

• Regulation D: Reserve Requirements of Depository Institutions Interim Final Rule, 85 Fed. Reg. 23445, 23446 (April 28, 2020) (“As a result of the elimination of reserve requirements on all transaction accounts, the retention of a regulatory distinction in Regulation D between reservable ‘transaction accounts’ and non-reservable ‘savings deposits’ is no longer necessary.”)

• Federal Reserve, Savings Deposit FAQs, #3 (May 13, 2020) (“Are the recent amendments to Regulation D temporary or permanent? On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six-per-month limit on convenient transfers from ‘savings deposits.’ The underlying reason enabling the changes in Regulation D is the FOMC’s choice of monetary policy framework of an ample reserve regime. In such a regime, reserve requirements are not needed. As a result, the distinction made by the transfer limit between reservable and non-reservable accounts is also not necessary. The Committee’s choice of a monetary policy framework is not a short-term choice. The Board does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant.”)

• Federal Reserve, Savings Deposit FAQs, #13 (May 13, 2020) (“How did the recent amendments to Reg D impact Reg CC? On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six per month limit on convenient transfers from ‘savings deposits.’ Among other things, the interim final rule amended the definition of ‘transaction account’ in 12 CFR 204.2(e) such that the definition now includes accounts described in 204.2(d)(2) (savings deposits). Regulation CC provides that an ‘account’ subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC ‘account’ definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC.”)