Tie IRA Rates to an Outside Index?

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Question:

We have looked at Reg DD but cannot find where it even mentions this. Are we required to tie IRA rates (variable or fixed) to an outside index? I think that back in the 1980’s when they first became available, it was a best practice. But I cannot find it mentioned anywhere now?

Answer:

The regulation makes no distinction between IRA deposits and all others. It does require that you disclose how the interest rate on a consumer deposit is determined. If you use an index, the commentary indicates that initial disclosure must:

Paragraph (b)(1)(ii)(B)(1).

i. Identify the index and specific margin, if the interest rate is tied to an index.

Banks were never required to tie deposit interest rates to an index. It has never been a common practice.