HB 2423
In CommitteeHouse
Retirement distributions
Protecting consumers from unreasonable delays in the processing of retirement account distributions.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill sets strict time limits — 15 business days — for financial institutions to process and send out retirement account distributions (like withdrawals or rollovers to IRAs). If they miss the deadline, they must pay consumers interest at the current Treasury bill rate and face civil penalties up to $500 per violation.
- Requires financial institutions to transmit retirement distribution funds within 15 business days of receiving a valid request.
- Allows financial institutions to request additional information, but only if the request is made in writing within 3 business days and the information is truly necessary — otherwise, the 15-day clock keeps running.
- Requires financial institutions to pay market rate interest (based on the 4-week U.S. Treasury bill rate) on delayed funds, starting on the 16th business day after the request was received.
- Gives consumers the right to sue for up to $500 per violation, plus court costs, attorney fees, and any accrued interest.
- Creates a new legal framework under Title 21 RCW to regulate how financial institutions handle retirement account distributions — but explicitly does *not* regulate employer-sponsored retirement plans governed by federal ERISA law.
Who is affected
- Retirement account holders — People who request money from retirement accounts (like 401(k)s, IRAs, or similar plans) and experience delays longer than 15 business days in receiving or transferring those funds.
- Financial institutions — Banks, credit unions, broker-dealers, and other firms that manage or process retirement account distributions in Washington State.
- Washington consumers with retirement savings — Consumers who may lose investment growth or interest when their retirement funds are held up during processing delays.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (3)
Retirement account holders who experience delays will receive market-rate interest compensation and up to $500 in statutory damages, directly recovering lost investment growth and interest—especially valuable for lower- and middle-income retirees who rely on precise cash flow and cannot afford to lose compounding returns.
FinancialPeopleRef: Sec. 3(1); Sec. 4(1)-(2); Sec. 5(1)The 3-day window for requesting supplemental information—and the rule that delays due to consumer-provided information do not toll the clock unless the request is made *in writing*—reduces arbitrary or pretextual delays by institutions, strengthening consumer autonomy and procedural fairness.
Rights & LibertiesPeopleRef: Sec. 3(2); Sec. 2(5)The bill creates a new private right of action with statutory damages and attorney-fee recovery, empowering consumers to enforce their rights without bearing full litigation costs—addressing the power imbalance between individuals and large financial firms.
Rights & LibertiesPeopleRef: Sec. 1(3); Sec. 5(2)
Potential Concerns (3)
Financial institutions may face increased operational and compliance costs due to the 15-day processing mandate and interest liability, which could lead to higher fees, reduced service quality, or reduced product offerings—particularly for smaller credit unions and community banks that lack economies of scale.
FinancialPeopleRef: Sec. 3(1); Sec. 4(1)The $500-per-violation statutory damages and mandatory attorney-fee awards may incentivize frivolous litigation or aggressive class-action lawsuits against financial institutions, especially where delays stem from systemic issues (e.g., third-party custodian errors) rather than willful misconduct.
Business & EmploymentLean peopleRef: Sec. 5(1); Sec. 3(2)The bill explicitly excludes ERISA-governed employer-sponsored plans from regulation, creating a regulatory gap where delays in 401(k) rollovers to IRAs are covered, but internal plan processing (e.g., employer matching contributions, loan approvals) are not—potentially confusing consumers about the scope of protection.
Business & EmploymentRef: Sec. 2(4); Sec. 3(1)
Who Is Most Affected
Low- and middle-income retirees or near-retirees who rely on predictable access to retirement funds for living expenses, debt payments, or medical needs will benefit significantly from timely access and compensation for delays. The $500 statutory damages and interest recovery are especially valuable where out-of-pocket costs from delays (e.g., late fees, overdrafts) are high relative to income.
Large financial institutions (e.g., national banks, major broker-dealers) may absorb compliance costs more easily than smaller firms, but will face increased legal and operational exposure. Smaller credit unions and community banks may face disproportionate burden due to limited resources for compliance infrastructure and legal defense.
Consumers with larger retirement balances may benefit more in absolute dollar terms from interest accrual (since interest is calculated on the full distribution amount), but the $500 statutory cap and 15-day window apply equally regardless of balance—making the relative benefit larger for lower-balance accounts.
Attorneys and legal service providers may see increased demand for consumer class actions and individual lawsuits under the new statutory framework, especially where systemic delays occur across institutions.
The Department of Financial Institutions will gain new rulemaking and enforcement responsibilities, increasing its workload but also its regulatory authority over retirement-related financial services in the state.