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F ederal Reserve

bank of

DALLAS, TEXAS

Dallas

75222
C irc u la r No. 79-97
June 4, 1979

PROPOSED AMENDMENT TO REGULATION Q
Payment of Time Deposits Before M aturity Upon the Death of a Depositor

TO ALL MEMBER BANKS AND
OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has issued for
comment a proposal to require member banks to pay a time deposit p rio r to ma­
tu rity without penalty upon the death of any owner when requested to do so by
the owner's representative or by any other ow ner.
Printed on the following pages is a copy of the proposed amendment.
Interested persons are invited to submit comments to the Secretary, Board of
Governors of the Federal Reserve System, Washington, D .C . 20551, to be re ­
ceived no later than July 2, 1979. Comments should be in w riting and refer to
Docket No. R-0228.
Any questions concerning the proposed amendment should be directed
to our Consumer A ffairs Section of the Bank Supervision and Regulations De­
partment, Ext. 6171.
Sincerely yours,
Robert H. Boykin
First Vice President

Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank:
1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). For calls placed locally, please use 651 plus
the extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[12 C.F.R. Part 217]
(Docket No. R-0228)
Notice of Proposed Rulemaking
Payment of Time Deposits Before Maturity

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Proposed rule.

SUMMARY:

The Board of Governors of the Federal Reserve System proposes

to amend Regulation Q concerning the payment of time deposits before
maturity in the event of the death of any owner of the time deposit
funds.

Under the Board's current regulation, a member bank, upon the

death of any owner of a time deposit,

is permitted to pay such time

deposit before maturity without imposition of the normally required
early withdrawal interest forfeiture penalty.

Under the proposed amendment,

a member bank would be required to pay a time deposit prior to maturity
without penalty upon the death of any owner when requested to do so
by the owner's representative or by any other owner.
DATE:

Comments must be received by July 2, 1979.

ADDRESS:

Theodore E. Allison, Secretary, Board of Governors of the

Federal Reserve System, Washington, D.C. 20551.

All material submitted

should include the Docket Number R-0228.
FOR FURTHER INFORMATION CONTACT:
Counsel

Gilbert T. Schwartz, Assistant General

(202/452-3623) or Anthony F. Cole, Senior Attorney

(202/452­

37 1 1 ) , Legal Division, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.

-2 -

SUPPLEMENTARY INFORMATION:

Regulation Q currently provides that upon

the death of any owner of time deposit funds, a member bank, if it so
chooses, may pay all or a portion of such time deposit funds before
maturity without imposing the normally required early withdrawal interest
forfeiture* penalty

(§ 217.4(d)).

The Board propoaea to amend this provision

to require a member bank to pay a time deposit prior to maturity without
penalty upon the death of any owner when requested to do so by the owner's
representative or by any other owner.

The Board believes that the proposed

amendment will more fully effectuate the intent of this exception to
the early withdrawal penalty rule, which is to facilitate the administration
of estates as well as ease the financial burdens occasioned by the death
of a depositor.

Public comment is requested on whether the proposed amendment,

if adopted, should apply to all time deposits or only to those time deposits
issued after the implementation date.
All comments and information on this proposal should be submitted
in writing to the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551, to be received by July 2, 1979.
material submitted should include the Docket Number R-0228.

All

Such material

will be made available for inspection and copying upon request except
as provided in section 261.6(a)
of Information (12 C.F.R.

of the Board's Rules Regarding Availability

261.6(a)).

Pursuant to its authority under secton 1 9 (j) of the Federal
Reserve Act

(12 U.S.C. § 37 1 b ) , the Board proposes to amend Regulation Q

(12 C.F.R.

§ 217.4)

as follows:

§ 217.4 —

PAYMENT OF TIME DEPOSITS BEFORE MATURITY
*

*

*

*

*

-3 -

(d) Penalty for early withdrawals.

***

A time deposit may

be paid before maturity without a forfeiture of interest as prescribed
by this paragraph in the following circumstances:
(1) Where a merber bank pays all or a portion of a time deposit
upon the death of any owner of the time deposit funds.

Provided, however,

a member bank is required to pay a time deposit prior to maturity without
penalty upon the death of any owner of the funds when requested to do
so by the owner's representative or other o w n e r s ; - ^ ^
-

»

*

*

*

***

*

11a/ For the purposes of this provision, an "owner" of time deposit
funds is any individual who at the time of his or her death has full
legal and beneficial title to all or a portion of such funds or, at
the time of his or her death, has beneficial title to all or a portion
of such funds and full power of disposition and alienation with respect
thereto.
By order of tho Board of Governors, May 30, 1979.

(Signed) Theodore E. Allison

Theodore E. Allison
Secretary of the Board

[SEAL]


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102