Lump sum retirement payments

AN ACT Relating to the threshold for payment of a lump sum 1
retirement allowance in lieu of a monthly benefit; and amending RCW 2
41.40.625, 41.32.762, 41.35.410, 41.37.200, and 41.26.425.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 41.40.625 and 1994 c 197 s 27 are each amended to 5
read as follows: 6
(1) On or after June 10, 1982, the director may pay a member 7
eligible to receive a retirement allowance or the member's 8
beneficiary, subject to the provisions of subsection (5) of this 9
section, a lump sum payment in lieu of a monthly benefit if the 10
initial monthly benefit computed in accordance with RCW 41.40.620 11
would be less than ((fifty dollars)) $250. This $250 threshold shall 12
be increased annually as determined by the director. The lump sum 13
payment shall be the greater of the actuarial equivalent of the 14
monthly benefits or an amount equal to the individual's accumulated 15
contributions plus accrued interest. 16
(2) A retiree or a beneficiary, subject to the provisions of 17
subsection (5) of this section, who is receiving a regular monthly 18
benefit of less than fifty dollars may request, in writing, to 19
convert from a monthly benefit to a lump sum payment. If the director 20
approves the conversion, the calculation of the actuarial equivalent 21
Z-0520.1
HOUSE BILL 2124
State of Washington 69th Legislature 2026 Regular Session
By Representatives Couture, Fitzgibbon, Chase, Zahn, Wylie, Thomas,
Gregerson, Ormsby, Griffey, Graham, and Bernbaum; by request of
Department of Retirement Systems
Prefiled 12/10/25. Read first time 01/12/26. Referred to Committee
on Appropriations.
p. 1 HB 2124
of the total estimated regular benefit will be computed based on the 1
beneficiary's age at the time the benefit initially accrued. The lump 2
sum payment will be reduced to reflect any payments received on or 3
after the initial benefit accrual date. 4
(3) Persons covered under the provisions of subsection (1) of 5
this section may upon returning to member status reinstate all 6
previous service by depositing the lump sum payment received, with 7
interest as computed by the director, within two years of returning 8
to service or prior to re-retiring, whichever comes first. In 9
computing the amount due, the director shall exclude the accumulated 10
value of the normal payments the member would have received while in 11
beneficiary status if the lump sum payment had not occurred.12
(4) If a member fails to meet the time limitations under 13
subsection (3) of this section, reinstatement of all previous service 14
will occur if the member pays the amount required under RCW 15
41.50.165(2). The amount, however, shall exclude the accumulated 16
value of the normal payments the member would have received while in 17
beneficiary status if the lump sum payment had not occurred.18
(5) Only persons entitled to or receiving a service retirement 19
allowance under RCW 41.40.620 or an earned disability allowance under 20
RCW 41.40.670 qualify for participation under this section.21
(6) It is the intent of the legislature that any member who 22
receives a settlement under this section shall be deemed to be 23
retired from this system. 24
Sec. 2. RCW 41.32.762 and 1994 c 197 s 19 are each amended to 25
read as follows: 26
(1) On or after June 10, 1982, the director may pay a 27
beneficiary, subject to the provisions of subsection (5) of this 28
section, a lump sum payment in lieu of a monthly benefit if the 29
initial monthly benefit computed in accordance with RCW 41.32.760 30
would be less than ((fifty dollars)) $250. This $250 threshold shall 31
be increased annually as determined by the director. The lump sum 32
payment shall be the greater of the actuarial equivalent of such 33
monthly benefits or an amount equal to the individual's accumulated 34
contributions plus accrued interest. 35
(2) A beneficiary, subject to the provisions of subsection (5) of 36
this section, who is receiving a regular monthly benefit of less than 37
fifty dollars may request, in writing, to convert from a monthly 38
benefit to a lump sum payment. If the director approves the 39
p. 2 HB 2124
conversion, the calculation of the actuarial equivalent of the total 1
estimated regular benefit will be computed based on the beneficiary's 2
age at the time the benefit initially accrued. The lump sum payment 3
will be reduced to reflect any payments received on or after the 4
initial benefit accrual date. 5
(3) Persons covered under the provisions of subsection (1) of 6
this section may upon returning to member status reinstate all 7
previous service by depositing the lump sum payment received, with 8
interest as computed by the director, within two years of returning 9
to service or prior to re-retiring, whichever comes first. In 10
computing the amount due, the director shall exclude the accumulated 11
value of the normal payments the member would have received while in 12
beneficiary status if the lump sum payment had not occurred.13
(4) If a member fails to meet the time limitations under 14
subsection (3) of this section, reinstatement of all previous service 15
will occur if the member pays the amount required under RCW 16
41.50.165(2). The amount, however, shall exclude the accumulated 17
value of the normal payments the member would have received while in 18
beneficiary status if the lump sum payment had not occurred.19
(5) Only persons entitled to or receiving a service retirement 20
allowance under RCW 41.32.760 or an earned disability allowance under 21
RCW 41.32.790 qualify for participation under this section.22
(6) It is the intent of the legislature that any member who 23
receives a settlement under this section shall be deemed to be 24
retired from this system. 25
Sec. 3. RCW 41.35.410 and 1998 c 341 s 102 are each amended to 26
read as follows: 27
(1) The director may pay a member eligible to receive a 28
retirement allowance or the member's beneficiary, subject to the 29
provisions of subsection (5) of this section, a lump sum payment in 30
lieu of a monthly benefit if the initial monthly benefit computed in 31
accordance with RCW 41.35.400 would be less than ((fifty dollars )) 32
$250. This $250 threshold shall be increased annually as determined 33
by the director. The lump sum payment shall be the greater of the 34
actuarial equivalent of the monthly benefits or an amount equal to 35
the individual's accumulated contributions plus accrued interest.36
(2) A retiree or a beneficiary, subject to the provisions of 37
subsection (5) of this section, who is receiving a regular monthly 38
benefit of less than fifty dollars may request, in writing, to 39
p. 3 HB 2124
convert from a monthly benefit to a lump sum payment. If the director 1
approves the conversion, the calculation of the actuarial equivalent 2
of the total estimated regular benefit will be computed based on the 3
beneficiary's age at the time the benefit initially accrued. The lump 4
sum payment will be reduced to reflect any payments received on or 5
after the initial benefit accrual date. 6
(3) Persons covered under the provisions of RCW 41.40.625 or 7
subsection (1) of this section may upon returning to member status 8
reinstate all previous service by depositing the lump sum payment 9
received, with interest as computed by the director, within two years 10
of returning to service or prior to reretiring, whichever comes 11
first. In computing the amount due, the director shall exclude the 12
accumulated value of the normal payments the member would have 13
received while in beneficiary status if the lump sum payment had not 14
occurred. 15
(4) If a member fails to meet the time limitations under 16
subsection (3) of this section, reinstatement of all previous service 17
will occur if the member pays the amount required under RCW 18
41.50.165(2). The amount, however, shall exclude the accumulated 19
value of the normal payments the member would have received while in 20
beneficiary status if the lump sum payment had not occurred.21
(5) Only persons entitled to or receiving a service retirement 22
allowance under RCW 41.35.400 or an earned disability allowance under 23
RCW 41.35.440 qualify for participation under this section.24
(6) It is the intent of the legislature that any member who 25
receives a settlement under this section shall be deemed to be 26
retired from this system. 27
Sec. 4. RCW 41.37.200 and 2004 c 242 s 26 are each amended to 28
read as follows: 29
(1) The director may pay a member eligible to receive a 30
retirement allowance or the member's beneficiary, subject to 31
subsection (5) of this section, a lump sum payment in lieu of a 32
monthly benefit if the initial monthly benefit computed in accordance 33
with RCW 41.37.190 would be less than ((fifty dollars )) $250. This 34
$250 threshold shall be increased annually as determined by the 35
director. The lump sum payment shall be the greater of the actuarial 36
equivalent of the monthly benefits or an amount equal to the 37
individual's accumulated contributions plus accrued interest.38
p. 4 HB 2124
(2) A retiree or a beneficiary, subject to subsection (5) of this 1
section, who is receiving a regular monthly benefit of less than 2
fifty dollars may request, in writing, to convert from a monthly 3
benefit to a lump sum payment. If the director approves the 4
conversion, the calculation of the actuarial equivalent of the total 5
estimated regular benefit will be computed based on the beneficiary's 6
age at the time the benefit initially accrued. The lump sum payment 7
will be reduced to reflect any payments received on or after the 8
initial benefit accrual date. 9
(3) Persons covered under subsection (1) of this section may upon 10
returning to member status reinstate all previous service by 11
depositing the lump sum payment received, with interest as computed 12
by the director, within two years of returning to service or prior to 13
reretiring, whichever comes first. In computing the amount due, the 14
director shall exclude the accumulated value of the normal payments 15
the member would have received while in beneficiary status if the 16
lump sum payment had not occurred. 17
(4) If a member fails to meet the time limitations under 18
subsection (3) of this section, reinstatement of all previous service 19
will occur if the member pays the amount required under RCW 20
41.50.165(2). The amount, however, shall exclude the accumulated 21
value of the normal payments the member would have received while in 22
beneficiary status if the lump sum payment had not occurred.23
(5) Only persons entitled to or receiving a service retirement 24
allowance under RCW 41.37.210 or an earned disability allowance under 25
RCW 41.37.230 qualify for participation under this section.26
(6) It is the intent of the legislature that any member who 27
receives a settlement under this section shall be deemed to be 28
retired from this system. 29
Sec. 5. RCW 41.26.425 and 1994 c 197 s 9 are each amended to 30
read as follows: 31
(1) On or after June 10, 1982, the director may pay a 32
beneficiary, subject to the provisions of subsection (5) of this 33
section, a lump sum payment in lieu of a monthly benefit if the 34
initial monthly benefit computed in accordance with RCW 41.26.420 35
would be less than ((fifty dollars)) $250. This $250 threshold shall 36
be increased annually as determined by the director. The lump sum 37
payment shall be the greater of the actuarial equivalent of such 38
p. 5 HB 2124
monthly benefits or an amount equal to the individual's accumulated 1
contributions plus accrued interest. 2
(2) A beneficiary, subject to the provisions of subsection (5) of 3
this section, who is receiving a regular monthly benefit of less than 4
fifty dollars may request, in writing, to convert from a monthly 5
benefit to a lump sum payment. If the director approves the 6
conversion, the calculation of the actuarial equivalent of the total 7
estimated regular benefit will be computed based on the beneficiary's 8
age at the time the benefit initially accrued. The lump sum payment 9
will be reduced to reflect any payments received on or after the 10
initial benefit accrual date. 11
(3) Persons covered under the provisions of subsection (1) of 12
this section may upon returning to member status reinstate all 13
previous service by depositing the lump sum payment received, with 14
interest as computed by the director, within two years of returning 15
to service or prior to re-retiring, whichever comes first. In 16
computing the amount due, the director shall exclude the accumulated 17
value of the normal payments the member would have received while in 18
beneficiary status if the lump sum payment had not occurred.19
(4) If a member fails to meet the time limitations set forth 20
under subsection (3) of this section, the member may reinstate all 21
previous service under RCW 41.50.165(2) prior to retirement. The sum 22
deposited shall exclude the accumulated value of the normal payments 23
the member would have received while in beneficiary status if the 24
lump sum payment had not occurred. 25
(5) Only persons entitled to or receiving a service retirement 26
allowance under RCW 41.26.420 or an earned disability allowance under 27
RCW 41.26.470 qualify for participation under this section.28
(6) It is the intent of the legislature that any member who 29
receives a settlement under this section shall be deemed to be 30
retired from this system. 31
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p. 6 HB 2124