Retirement distributions

AN ACT Relating to protecting consumers from unreasonable delays 1
in the processing of retirement account distributions; adding a new 2
chapter to Title 21 RCW; and creating a new section.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. (1) The legislature finds that delays in 5
processing distributions from retirement accounts, including 6
rollovers to individual retirement accounts, can cause significant 7
financial harm to Washington consumers through lost investment 8
opportunities and lost interest earnings.9
(2) The legislature further finds that consumers have little 10
practical recourse when financial institutions retain funds for 11
extended periods after a valid distribution request has been 12
submitted. 13
(3) It is the intent of the legislature to protect consumers by 14
establishing reasonable timelines for the transmission of retirement 15
distribution funds and to require financial institutions to 16
compensate consumers when delays exceed those timelines.17
(4) Nothing in this chapter is intended to regulate employee 18
benefit plans governed by the employee retirement income security act 19
of 1974, but rather to regulate the business practices of financial 20
institutions doing business in Washington state. 21
H-2843.1
HOUSE BILL 2423
State of Washington 69th Legislature 2026 Regular Session
By Representatives Low and Bronoske
Read first time 01/13/26. Referred to Committee on Consumer
Protection & Business.
p. 1 HB 2423
NEW SECTION. Sec. 2. The definitions in this section apply 1
throughout this chapter unless the context clearly requires 2
otherwise.3
(1) "Financial institution" means any bank, credit union, trust 4
company, broker-dealer, investment company, or other entity that 5
holds or transmits consumer funds in connection with retirement 6
account distributions. 7
(2) "Market rate interest" means the average four-week United 8
States treasury bill rate as published by the United States 9
department of the treasury during the period in which the funds are 10
retained. 11
(3) "Qualified retirement plan" means a retirement plan in 12
compliance with applicable federal law including: 13
(a) Those described in section 401 (a), 401 (k), 403 (a), 403 (b), 14
408(k), or 408(p) of the internal revenue code; 15
(b) A traditional or Roth individual retirement account or 16
individual retirement annuity described in section 408 (a), 408(b), or 17
408A of the internal revenue code; or 18
(c) A deferred compensation retirement plan as described in 19
457(b) of the internal revenue code. 20
(4) "Retirement account distribution" means any disbursement, 21
direct rollover, or transfer request made by a consumer from a 22
qualified retirement plan. 23
(5) "Valid distribution request" means a request submitted by a 24
consumer in a manner prescribed by the financial institution, 25
accompanied by any forms or documentation reasonably required to 26
process the retirement account distribution. 27
NEW SECTION. Sec. 3. (1) A financial institution that receives 28
a valid distribution request shall transmit the funds to the consumer 29
or to the receiving financial institution no later than 15 business 30
days after the request is received.31
(2) A financial institution may request supplemental information 32
from the consumer, but such request does not toll the 15-business day 33
period unless the supplemental information is necessary to complete 34
the valid distribution request and the consumer is notified in 35
writing within three business days. 36
NEW SECTION. Sec. 4. (1) If a financial institution fails to 37
transmit funds within the time frame established under section 3 of 38
p. 2 HB 2423
this act, the financial institution shall pay the consumer market 1
rate interest, calculated daily, on the full amount of the retirement 2
account distribution request. 3
(2) Interest begins accruing on the 16th business day and 4
continues until all funds are successfully transmitted.5
(3) Interest paid under this section must be separate from, and 6
in addition to, the transmitted retirement account distribution 7
amount. 8
NEW SECTION. Sec. 5. (1) A consumer harmed by a violation of 9
this chapter may bring a civil action in a court of competent 10
jurisdiction to recover:11
(a) All interest owed under section 4 of this act;12
(b) Court costs and reasonable attorney fees; and13
(c) Statutory damages of up to $500 per violation.14
(2) The remedies in this chapter are cumulative and do not limit 15
other rights or remedies available under state or federal law.16
NEW SECTION. Sec. 6. The department of financial institutions 17
may adopt rules to implement and enforce this chapter.18
NEW SECTION. Sec. 7. If any provision of this act or its 19
application to any person or circumstance is held invalid, the 20
remainder of the chapter or the application of the provision to other 21
persons or circumstances is not affected.22
NEW SECTION. Sec. 8. Sections 1 through 6 of this act 23
constitute a new chapter in Title 21 RCW.24
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p. 3 HB 2423