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The text of the restriction on withdrawals from savings accounts, found in 204.2(d)(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 of §204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, or by check, draft, debit card, or similar order made by the depositor and payable to third parties.

If I'm parsing the sentence correctly, three groups of transfers and withdrawals are counted:

  1. to another account of the depositor at the same institution
  2. to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction
  3. by check, draft, debit card, or similar order made by the depositor and payable to third parties

It appears that a transfer to an account in the same name at a different bank (or credit union, or brokerage) is in none of these groups. It's not in group 1, because it is not to the same institution. An ACH transfer would fall into group 2, but it is not to a third-party. And a check would fall into group 3, but a check written to self is not to a third party.

Now, I expect that the account agreement with the bank counts all withdrawals and outbounds transfers, so they don't have to bother figuring out which are third-party and which are not (would require keeping track of owners of linked accounts). So in practice it probably doesn't matter. But does the Federal Reserve regulation require counting transfers to external accounts held by the same depositor, or is that just the bank's own rule?

The only way I could see these being counted in the regulation is if the external institution is counted as the payee, and not the accountholder.

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So in practice it probably doesn't matter. But does the Federal Reserve regulation require counting transfers to external accounts held by the same depositor, or is that just the bank's own rule?

I think you're right, in practice it doesn't matter. I've never seen an implementation of Regulation D in which a transfer to another account at a different institution but with the same account owner wouldn't count toward the 6 withdrawal limit. I agree that the wording introduces some ambiguity and suggests these transfers shouldn't count.

From experience with my banks and about 30 minutes of reading random banks Reg-D pages it seems like they simply limit the number of withdrawals of certain types rather than worrying about who the receiving party is. Whether this is conveyed as the proper interpretation elsewhere or is just the most practical implementation of the regulation is not clear.

What is clear is that this is the most practical implementation. A bank could exclude these transfers from the monthly limit and challenge the industry standard Reg-D implementation, but there is no benefit to risking regulatory action or enabling customers to move their money out of their accounts with greater ease/frequency.

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If it worked as you propose:

  • the bank would have to know that those two accounts are owned by the same person. Names would not be enough. The micro transactions used to establish that you can see both accounts wouldn't be enough. They would have to establish ownership.

But even if that was true. They would then fall into your first category

  1. to another account of the depositor at the same institution.

You are proposing that a transfer between banks would be the same as a transfer within a family of accounts. which are also limited

The goal of the regulation is to treat the savings account as an account with a low number of transfers out each month. Six transfers out is the maximum. More than that and the money should be in a checking account.

  • I quote my question: "It's not in group 1, because it is not to the same institution" – Ben Voigt Sep 23 '18 at 14:38
  • The regulation is designed to say if you make more than 6 transfers out, it is a checking account. What you propose would go against the purpose of the regulation. – mhoran_psprep Sep 23 '18 at 16:03
  • No, because withdrawals and transfers submitted through an ATM or in-person are also allowed and don't count against the limit -- and those are, in my view, far more associated with a checking (or "transaction") account than five-digit transfers – Ben Voigt Sep 23 '18 at 19:53

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