May 31, 2018
Securities and Exchange Commission
To the and Exchange Commission,
I'm counting on you to make a stronger rule that closes the loophole.
Americans who've worked hard to save for retirement deserve peace of
mind about their financial security.
When I retired from AT&T in Feb. 2009 I was given paperwork
instructing me on the two options I had to choose from for my
retirement pension. The documents instructed me to contact my financial
institution (bank) to research opening an IRA, and the monthly pension
pay out that would be associated with that choice, which I did, or to
contact a Fidelity Investments representative through the AT&T
benefits center if I had questions about taking the lump sum payment
option. When I called the phone number for the benefits center from the
documents to speak with the representative the only question I had
about choosing the lump sum option, was how much would I owe in income
tax if I chose the lump sum option? The representative quoted that I
would owe 20% in federal taxes, and 5 or 10% in state taxes, and
another fee that escapes me at the moment, which is what was also
stated in the documents I was given to read, so I felt that I had
understood the document's meaning once she confirmed what I had read.
So, I did my calculations based on this conversation, and decided the
lump sum option made more sense for me, sense there would be enough to
pay off my bills, and then put some in investments like an invention I
was working on at the time. A few days later I was sent the final
documents representing the lump sum choice I had made. Again I
contacted the benefits center to speak with a representative, and we
walked through the paperwork. To be sure that I was understanding
correctly when we again discussed the stated taxes that I would owe, I
asked him again about the stated tax percentages stated in the
document, and if that would be it as far as taxes owed, and he stated
yes, that was it. Based on that conversation we confirmed my choice,
and I retired some days, or weeks later. When I went to have the person
that does my taxes file them at the end of the year, and he stated,
that what was stated in the documents was not a real representation of
my taxes owed, but only a partial deduction, and that I would have to
pay another $145,000 or so, I was incredulous with disbelief, because I
had already paid about $57,000. If the percentages stated in the
paperwork that I had been given represented only a partial deduction,
then that is what I should have been told by those representing
Fidelity Investments that were charged with advising me, and if not,
then they should have been trained, and instructed to refer me to my
tax accountant if I had any tax questions, if they knew they were not
qualified to advise me properly. It is not like anyone wouldn't
understand the reason that I would be asking about what I would owe in
taxes in this situation. So, whether intentionally, or unintentionally,
I feel Fidelity Investments failed me miserably in exercising their
fiduciary responsibility in my situation, and cost me a smooth
transition into retirement to one of anger, disappointment, and
uncertainty. The fiduciary rules are very important for retirees that
have worked hard for years to look forward to retirement, and should be
made to represent the retiree fairly and properly, not designed to
benefit the investment brokerage firm over the retiree. What the heck
is going on in this country anymore? More and more there seems to be
the mentality of there is only honor among thieves determined to prey
on the citizens that live their lives playing by the rules, instead of
breaking them!
Sincerely,
John Snell