Jeff Billimek’s Journal

Back in 2002 I opened a Roth IRA to put some extra money in. The intention was to use it as a mid-term savings and possibly a place to take money out of when I purchase a house for the first time.

I read up on the rules about early withdrawals from a Roth IRA and exceptions when using the money for a first-time home purchase. I funded it for the next few years using all after-tax dollars and it wasn’t a rollover or anything.

So when it was time for me to purchase the new townhouse in 2004, I had a little over $11,000 built-up in the Roth IRA. I wanted to make sure I did everything correctly so I called up Fidelity and spoke with one of their ‘Tax Advisor Experts’ about how to handle this. The person I spoke with looked at my info and told me that I could take out any amount I wanted because the entire balance of the Roth IRA was funded with after-tax dollars and it could be treated just like any other brokerage account.

This made sense to me and given that this tax advice was coming from a supposed qualified professional working for Fidelity where my account lives, I didn’t have any worries.

In fact, when Jen and I were preparing out taxes for the 2004 tax year, I sent her an email to give to the accountant explaining the Roth IRA early withdrawal and referenced (in summary) my conversation with the Fidelity qualified tax professional. It’s not like I made this up, the conversation did happen and the advice given to me was as I remembered.

I withdrew $11,000 from the IRA and used the entire amount towards the down-payment for the new townhome.

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Fast-forward to today. Jen and I got a nasty letter in the mail from the IRS telling us that we owe nearly $5,000 in back-taxes because of an undocumented early withdrawal from a retirement account. They imposed all sort of early-withdrawal penalties, interest, etc. This was extremely frustrating to see.

I began to dig through old documents and found the email outlining my conversation with the Fidelity qualified professional tax advisor. I also found the 2004 1099 form which showed the $11,000 withdrawal and noticed that it didn’t show any provisions about what type of withdrawal it was, only that it was early.

Next I called up Fidelity and spoke with another one of their qualified professional tax advisors. I outlined everything that happened, including a synopsis of my original conversation with them back in early 2004.

He basically laughed at me and told me that I was completely wrong and that I was responsible for all of the taxes that the IRS was demanding. Furthermore, he told me that this was a matter between me and the IRS and that Fidelity has nothing to do with it. When I asked him about the contradicting (and now revealed to be completely and utterly _FALSE_) information given to me by the other Fidelity qualified professional tax advisor, he said that he didn’t know anything about that and couldn’t help me.

I was blatantly lied to and misled by the Fidelity qualified professional tax advisor.

Naturally this made me very upset and I demanded to know the name of the person who ‘helped’ me back in 2004. The guy gave me the person’s name and I also asked for the name of that person’s supervisor.

I called up the supervisor who was not in the office so I left a voice mail - and never got a return call. This is how Fidelity treats their customers. I don’t like Fidelity and will never trust them again.