F & G Life Doesn't Know What A 403(b) Is
Fidelity and Guaranty Life is a petty company
Back in June I began helping a client move their money from 403(b) fixed annuities at a company named Fidelity and Guaranty life (F & G Life). I had no idea it would turn so bizarre.
The first step in moving money out of a government 403(b) plan is contacting the vendor to see what they require. My client and I called and was told that F & G life doesn’t require their own paperwork, only that of the company we are moving the funds to along with a Letter of Acceptance and approval from the school employer or their compliance administrator.
While I found it odd they did not require their own paperwork, I proceeded.
I did all of the following (yes, it’s an absolute pain in the ass moving 403(b) money):
Client signs Transfer of Assets form
Client signs compliance administrator form
These are both submitted along with a statement to the company (in this case Fidelity Investments - a different company) whom we are moving the money to. The goal is to receive a Letter of Acceptance.
After a few days, a Letter of Acceptance is received and all the paperwork is then submitted to the compliance administrator.
The compliance administrator approves the request and forwards to F & G Life.
This is the part where F & G Life looks over the paperwork to ensure everything is properly filled out and signed and that they have the necessary approvals. If so, they should issue the rollover check.
I submitted two sets of paperwork, one for each spouse. The paperwork was identical (obviously each was different with respect to the actual person’s information) and submitted at the same time.
The husband’s paperwork was processed almost immediately. The wife’s paperwork was deemed not in good order. Remember, the paperwork was exactly the same for both.
When I called with the client to inquire as to why, we were told that there were two issues:
Their was no compliance administrator approval, and
We had checked the box “Qualified Plan” instead of writing “403(b)” in the “Other” field on the Fidelity Investments paperwork.
Both of these issues were strange to me.
First, how did F & G Life even have the paperwork if there wasn’t a compliance approval? It was the compliance entity that had sent them the paperwork.
After my inquiry, the rep pulled up the paperwork and told me that in fact, everything was signed correctly by the compliance administrator.
On the second issue, um, a 403(b) IS A QUALIFIED PLAN. That’s why that box is checked.
This is not disputed by anyone in the industry, here is a primer on qualified plans if you are interested.
I inquired with the representative why they would reject the paperwork simply for me checking the box “qualified plan” when in fact the correct box to check was “qualified plan” because a 403(b) is in fact a “qualified plan?” The response was that the team processing the request wants it to say 403(b), not qualified plan. What?
You wouldn’t believe the run around I got for the next week. Even after pointing out their errors, F & G doubled down and said they would not process the paperwork with the box “qualified plan” checked.
Mind you, on paperwork that F & G uses for other 403(b) products, their paperwork literally states that a 403(b) IS a qualified plan. Here is the exact language they use:
“An “eligible employer plan” includes a plan qualified under section 401(a) of the Internal Revenue Code, including a 401(k) plan, profit-sharing plan, defined benefit plan, stock bonus plan and money purchase plan; a section 403(a) annuity plan; a section 403(b) tax-sheltered annuity; and an eligible section 457(b) plan maintained by a governmental employer.”
So F & G Life knows that in fact a 403(b) is a qualified plan and thus they know that the paperwork was filled out correctly.
They still refused to process the paperwork.
After speaking with them again, they told me that the paperwork from the compliance administrator wasn’t signed - despite them telling me the week prior it was. I checked with the compliance administrator and they pulled up the paperwork they sent to F & G - it was signed. Did F & G Life flat out lie to me? Also, why didn’t they send my client a letter saying all of this?
Why is F & G Life holding my clients money hostage?
Because they can. It’s what 403(b) companies do.
It certainly seems as if F & G Life has screwed up and they know it and don’t want to admit they are wrong, so they have doubled down (as a reminder, they processed the husband’s paperwork that also checked the box marked “qualified plan”).
The land of 403(b) is lawless. It will take weeks to start the process over. Meanwhile, F & G maintains possession of my client's funds.
Yes. We have filed with the state insurance commission a complaint. Perhaps the State’s Attorney General should be next.