401k Tax Question

[LivingAlmostLarge]

Okay, now realize I do everything in my household regarding finances. So my DH is loving but clueless and we don't fight about money.

So he left his job 1 year ago and had about $40k in a 401k. I finally this month 8/2008 opened a Rollover IRA for him. Yes I did it, I did it online and printed off the papers and he signed it without reading it. He doesn't care.

Now unfortunately the 401k is with fidelity and the Rollover IRA is with firstrade. Firstrade was unable to get it directly rolled over from Fidelity, some bull**** about needing a check cut according to Fidelity. So my DH called and said mail a check. They said it will be $25, and he offered to send them a check, they said it would come out of his 401k money.

They also said that it would not be taxed or considered a withdrawal, but it was an "account management" fee. This is utter and total crap by the way. So the check is in the mail.

Is this $25 going to really not be taxed and we have to file more forms for an early distribution? Or was the Fidelity representative BS my DH?

And yes I'm a total control freak, but they wouldn't talk to me or else I would have discussed with them other options. My DH just sort of agreed and felt pressured since he noramlly does not deal with this sort of thing. Arrgh, I'm gnashing my teeth right now.

So tax wise are we going to be screwed over this year and have to fill out more forms?

And No we're not spending this check it's going straight to the Rollover IRA and we can't put it into a Roth IRA, we don't qualify.

[jIM_Ohio]

Basically Fidelity can withdraw fees from a 401k for a check the same way they withdraw fees for frequent trading or T Rowe withdrew fees from me for low account balances before I had 5k in a fund or 100k invested with them.

The money was not taxed in any of the above cases and no early withdraw penalties or taxes will be owed.

Check with your plan- above is my best guess based on my own experience.

[atomicrc11]

Usually with Rollovers a check is required. One way to avoid it would have been to roll it over to an IRA at Fidelity. Then it probably would have been instant since it was staying with the same company.

As for the fee, Fidelity didn't make it clear, but it was my fault for not reading the terms, they charged me $50 to transfer my IRA. So it looks like it is common.

[jIM_Ohio]

T Rowe Price charged me nothing the 3 times I have done a rollover from a 401k to them. 2 times the 401k was Vanguard, one other time the 401k was someone else.