Why I will never, ever do business with Fidelity again

In October 2010, I left my position at One to One Interactive to start my new role at SQL Sentry. One to One has dissolved in the meantime (about a year ago), and I was given notice at that time that I could leave my money in their Fidelity 401K, or roll it over into my new IRA. Unfortunately my new IRA is a Roth IRA, which at the time was not a possible rollover target (and maybe still is not). So I let my money sit there. It dipped a bit but came back over the past year.

This past Friday, I got an e-mail that told me: “We are pleased to inform you that your transaction has been processed.” It went on to tell me that my request to cash out my 401K plan was successful. The problem? I did not request this. My former employer did. And I did not receive any notification, so I did not have the ability to prevent it or change the way the proceeds were distributed.

The net result is that they took 20% out for tax withholdings. So now I can deposit the remainder in a different IRA account (not with Fidelity, you can be sure), but in order to not have to pay even more taxes and penalties, I need to make up the difference out of pocket, and have the new fund (USAA, who are way more awesome than Fidelity) do all kinds of creative paperwork for me so that those contributions count toward my taxes in April.

I’ve talked to four different people at Fidelity to try and resolve this problem. All four have given me different answers, or have changed their answers during or between conversations. The first person I talked to told me that I couldn’t request a stop and re-issue, that my plan administrator had to do that, and if they did that, they would process it no problem. I was able to track down the plan administrator, thankfully, and he was very helpful in getting the request in on my behalf. The next person I talked to told me that they couldn’t process it, and it had nothing to do with whether my plan administrator approved it or not – I never needed the plan administrator’s permission, but it couldn’t be done anyway because, “your tax withholdings have already been sent to the IRS.”

I call bullshit. I know damn well Fidelity isn’t writing checks to the IRS every day, and I know damn well that even if they did, they *can* correct these things. As a reminder, the disbursement happened *Friday* and I haven’t even received my check yet. So please don’t tell me they couldn’t fix this if they wanted to. I suspect they are extremely more difficult to work with when you are a customer taking your money elsewhere (even in my case, where the cash out wasn’t my choice in the first place). I should ask them if they will fix this if my new IRA rollover account is with them instead of USAA.

How is what Fidelity doing legal? Or right? It certainly smells wrong to me.

** UPDATE **

Fidelity has reached out via twitter:

We’ll see if this goes anywhere useful. Nicole has a sizable 401K at Fidelity too, and if this doesn’t get resolved adequately, we’re going to be taking her business elsewhere as well.


    1. Rob, possibly. That’s what I’ve been trying to do all week – have them cancel the cash-out check and re-issue it as a trustee-to-trustee rollover (without the witholdings). This seems to be something they *could* do, and probably *do* do quite often. But all of my avenues so far have yielded roadblocks. I just don’t think I’ve scaled high enough the totem pole yet.

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