Fidelity Solo 401k
I opened a Solo 401k at Fidelity last year. However, I held off on making our contribution until just this month, so that we would be able to more accurately pinpoint our income.
This is one of the best characteristics of the solo 401k. As long as you establish your plan in the prior calendar year, you don’t need to make your contributions until your tax filing date, including extensions.
Fidelity Rejected My Contributions
Unfortunately, Fidelity sucks. I just sent in our contributions, and they were rejected. Apparently they closed my account, because my name didn’t match their records. I got married six years ago, but I have a different account there that was opened before that.
So let me get this straight, their computer system can’t handle opening a new account for someone who got married and uses their married name? Give me a break. I must be the only person to have ever gotten married and change their name, right?
Fidelity Service Impacts Our Tax Bill
And this is much worse than when Scottrade tried to make me pay fees to change my name! Because they closed my account last year (and did not notify me), I can no longer make my solo 401k contribution for last year.
Since my extension was filed with an assumed solo 401k contribution, I’d be on the hook for additional taxes, including penalties and interest. I spoke with a supervisor about the situation, and he apologized. However, that apology doesn’t pay the tax bill! Thanks Fidelity, you suck!
After spending hours brainstorming, I came up with a back up plan to divert my contribution to my husband since Public Employees can Double-dip on Retirement. Thank goodness we live in a community property state too, otherwise I wouldn’t be able to just switch it like that without other repercussions! Although I’m not happy about it, at least we avoided a large tax bill full of penalties and interest.
Fidelity Loses Our Business
I had planned to move a significant amount of money to Fidelity, using my solo 401k to execute a Roth IRA Conversion Strategy to Avoid Taxes. Looks like they’ll miss out on my business.
Instead, as soon as they cash the check for my husband’s contribution, I’ll be moving my account to a Vanguard solo 401k (which wasn’t available when I opened my solo 401k, but offers fantastic Vanguard Admiral Shares).
I’m sure it won’t matter to them that I’m moving my account. However, I’m a firm believer in taking your business elsewhere to demonstrate unacceptable service. They made a mistake they couldn’t fix. I assured them I’d tell everyone I knew, which is all of you! And for now I’ll be skipping the Fidelity credit card in favor of the Schwab credit card.
Taxes are complicated, so it’s very important to have a service provider you can trust. Unfortunately, Fidelity wasn’t reliable enough. Vanguard, my paperwork will be in the mail shortly!
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