wa-law.org > bill > 2025-26 > HB 2423 > Original Bill
The legislature finds that delays in processing distributions from retirement accounts, including rollovers to individual retirement accounts, can cause significant financial harm to Washington consumers through lost investment opportunities and lost interest earnings.
The legislature further finds that consumers have little practical recourse when financial institutions retain funds for extended periods after a valid distribution request has been submitted.
It is the intent of the legislature to protect consumers by establishing reasonable timelines for the transmission of retirement distribution funds and to require financial institutions to compensate consumers when delays exceed those timelines.
Nothing in this chapter is intended to regulate employee benefit plans governed by the employee retirement income security act of 1974, but rather to regulate the business practices of financial institutions doing business in Washington state.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Financial institution" means any bank, credit union, trust company, broker-dealer, investment company, or other entity that holds or transmits consumer funds in connection with retirement account distributions.
"Market rate interest" means the average four-week United States treasury bill rate as published by the United States department of the treasury during the period in which the funds are retained.
"Qualified retirement plan" means a retirement plan in compliance with applicable federal law including:
Those described in section 401(a), 401(k), 403(a), 403(b), 408(k), or 408(p) of the internal revenue code;
A traditional or Roth individual retirement account or individual retirement annuity described in section 408(a), 408(b), or 408A of the internal revenue code; or
A deferred compensation retirement plan as described in 457(b) of the internal revenue code.
"Retirement account distribution" means any disbursement, direct rollover, or transfer request made by a consumer from a qualified retirement plan.
"Valid distribution request" means a request submitted by a consumer in a manner prescribed by the financial institution, accompanied by any forms or documentation reasonably required to process the retirement account distribution.
A financial institution that receives a valid distribution request shall transmit the funds to the consumer or to the receiving financial institution no later than 15 business days after the request is received.
A financial institution may request supplemental information from the consumer, but such request does not toll the 15-business day period unless the supplemental information is necessary to complete the valid distribution request and the consumer is notified in writing within three business days.
If a financial institution fails to transmit funds within the time frame established under section 3 of this act, the financial institution shall pay the consumer market rate interest, calculated daily, on the full amount of the retirement account distribution request.
Interest begins accruing on the 16th business day and continues until all funds are successfully transmitted.
Interest paid under this section must be separate from, and in addition to, the transmitted retirement account distribution amount.
A consumer harmed by a violation of this chapter may bring a civil action in a court of competent jurisdiction to recover:
All interest owed under section 4 of this act;
Court costs and reasonable attorney fees; and
Statutory damages of up to $500 per violation.
The remedies in this chapter are cumulative and do not limit other rights or remedies available under state or federal law.
The department of financial institutions may adopt rules to implement and enforce this chapter.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the chapter or the application of the provision to other persons or circumstances is not affected.