SENATE BILL REPORT
SB 5367
As Reported by Senate Committee On:
Ways & Means, February 15, 2021
Title: An act relating to directing the department of retirement systems to create rules regarding automatic refunds of retirement contributions in the retirement systems listed in RCW 41.50.030.
Brief Description: Directing the department of retirement systems to create rules regarding automatic refunds of retirement contributions in the retirement systems listed in RCW 41.50.030.
Sponsors: Senator Conway; by request of Select Committee on Pension Policy.
Brief History:
Committee Activity: Ways & Means: 2/08/21, 2/15/21 [DP].
Brief Summary of Bill
  • Directs the Department of Retirement Systems to establish rules for eliminating inactive member accounts with a balance of less than $1,000.
SENATE COMMITTEE ON WAYS & MEANS
Majority Report: Do pass.
Signed by Senators Rolfes, Chair; Frockt, Vice Chair, Capital; Robinson, Vice Chair, Operating & Revenue; Wilson, L., Ranking Member; Brown, Assistant Ranking Member, Operating; Honeyford, Assistant Ranking Member, Capital; Schoesler, Assistant Ranking Member, Capital; Braun, Carlyle, Conway, Darneille, Dhingra, Gildon, Hasegawa, Hunt, Keiser, Liias, Mullet, Muzzall, Pedersen, Rivers, Van De Wege, Wagoner, Warnick and Wellman.
Staff: Amanda Cecil (786-7460)
Background:

Public employees that meet the requirements for membership in one of the public pension systems are generally required to join and make contribution payments until they leave service.  Both employee members and employers make contribution payments based on the cost of the retirement benefits.  Each pension system and plan has different requirements to be eligible for a retirement benefit, but no system has vesting requirements of less than five years.  Members that leave service prior to vesting have the option of leaving contributions in the plan or withdrawing the employee portion of the contribution for cash or as a rollover in to an eligible retirement account.  

 

In 2020, the Select Committee on Pension Policy considered directing the Department of Retirement Systems (DRS) to establish rules for eliminating inactive member accounts with a balance less than $1,000, and recommended this proposal to the 2021 Legislature.
Summary of Bill:

By January 1, 2022, DRS must establish rules related to: 

  • identifying inactive accounts of nonvested members whose account balance is less than $1,000; and
  • providing for the orderly closing and refunding of member accounts in accordance with the federal internal revenue code.

 

The refund of a member's account balance terminates all rights to future benefits, unless otherwise restored under the rules for each of the respective retirement systems.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:

PRO:  This bill was requested by the Select Committee on Pension Policy.  There are no contributions going in to or out of these accounts which is an administrative burden.  This would allow DRS to start the process of contacting individuals with inactive accounts.  This sets up the process and gives DRS the authority to proceed. 
Persons Testifying: PRO: Senator Steve Conway, Prime Sponsor.
Persons Signed In To Testify But Not Testifying: No one.