August 11th, 2008Fidelity BrokerageLink – AT&T 401k Rule Change Review
Riddle: What do you get when you cross a giant financial company with a giant telecommunications company and mix in complex rules and unannounced rule changes from both sides into an employee 401k plan?
Answer: Complete disaster and unhappy customers!
The financial company I’m referring to is Fidelity. The telecommunications company is AT&T AT&T Wireless Cingular Wireless Bell South SBC Wisconsin Bell Ameritech AT&T. AT&T has a complex history involving many divestitures, mergers, layoffs, name changes and utter confusion in the ranks. There is a humorous and scary summary of the complex AT&T history on youtube. Their 401k history is more confusing then their company history.
Like many 401k programs, I was limited to just a few Fidelity mutual funds as my investment choices. When the BrokerageLink option became available, I was eager to jump in and gain full control over my account. BrokerageLink behaves like a normal 401k in terms of tax treatment, but has no restrictions on what employees can buy or sell. All Fidelity Mutual Funds are available, and not just a select few. You can even purchase non-Fidelity mutual funds, individual stocks, bonds and ETF’s. I was even trading level 2 options in my 401k BrokerageLink (covered calls and direction calls and puts).
But despite the initial excitement, the BrokerageLink was not all it was cracked up to be. Any problems in the account often require multiple resources from both AT&T and Fidelity to sort out. And for ex-AT&T employees, it’s even worse. “Recently” AT&T instituted option rule changes for BrokerageLink accounts that disables all option trading within the BrokerageLink. I say “recently” because neither AT&T nor Fidelity could state exactly when those rule changes took effect. And neither could produce a copy of the letter informing employees and ex-employees of the rule changes. Those rule changes apply to employees and former employees alike. As an ex-employee with a leftover BrokerageLink account and OPEN OPTION CONTRACTS, I’m left wondering how to close my open option positions, and am patiently waiting for a return call from a Fidelity representative to explain it.
Closing the BrokerageLink is also not very straight forward. In theory, I just want to roll everything to a self directed IRA, and cut AT&T out of the rule making and changing picture altogether. But the AT&T 401k accounts were split into multiple accounts – standard 401k, “self directed” BrokerageLink, and cash balance pension. Each has its own set of ever changing rules. Each requires separate paperwork to move to the IRA. Each requires a separate Fidelity representative to explain the poorly documented rules. The rules themselves are mandated by AT&T, not Fidelity, which means an AT&T representative is often needed as part of a 3-way or 4-way conference call with Fidelity to answer any questions about it.
My review of the AT&T 401k and BrokerageLink: F-
My review of Fidelity 401k and BrokerageLink: D-. Not as bad as AT&T, but low score for allowing AT&T to mess up so many Fidelity accounts, and for partnering with such morons.
My review of Fidelity rollover IRA: TBD. I’m giving them another post rollover shot for four reasons:
- Despite the confusion, real U.S. based humans do answer the phones to help sort it out.
- They promised it will be much simpler to deal with Fidelity post rollover, when AT&T is completely out of the picture.
- They are giving me 1 year of commission free trades for the rollover. You can get your commission free trades here:
- Free access to Fidelity Active Trader Pro and Wealth Lab platforms.
Other interesting articles:
November 7th, 2009 at 9:40 am
Fidelity refuses to reply to subpoenas served on its registerd agent in the state.
And it’s not just Fidelity, it’s AON, the QDRO manager for ATT. AON purposefully messes QDRO’s and amounts so as to harass the alternate payee into accepting it’s deficient/rights violating transfer. The alternate payee is then forced to accept the transfer or challenge it in Federal Court under an ERISA action.
Nightmares abound about rollovers that were wrongly distributed. Here’s the kicker – Actuarial Science Associates (ASA) was bought by AON on January 1, 1998, just two years after it was spunoff from AT&T on January 1, 1996. This allowed for a pooling of interest merger by AON and a tax-free distribution (no change to the ASA company over first two years). Oh, and ASA’s people got to keep their defined benefit pension, while AT&T’s employees had their pensions converted to cash balance pensions worth 35-60 cents on the dollar, depending on the employee’s relevant info.
July 22nd, 2011 at 7:24 am
Great post, I have to agree with Mike here, in that the hardest solutions are often the most rewarding in the end.
October 15th, 2011 at 6:13 am
I got so fed up with the bad choices for my investments, I retired in 2009 to roll it all over into my own Vanguard account. AT&T should consider restructuring their employee 401K into something with more low cost asset classes available. I hope someone from their 401K committee is reading this. To simplify the plan across all layers of the company would be hard to do because of the unions, and other contracts that exist, but would make AT&T a better employer, and more desirable place to work.