Hey all,
In my infinite wisdom, I suggested that my wife roll her CO-PERA pension (10-years worth) over to a TIRA with Vanguard and her existing RIRA to a Vanguard RIRA, so we’d have all investments under one firm. In working with Vanguard, they understood what we were trying to achieve and opened both a TIRA and RIRA account for the funds to roll over into – walking us through the steps that we’d need to take for a smooth transaction. It’s been everything but that.

Unfortunately, my wife accidently checked CO-PERA’s RIRA as the landing place for the funds vs TIRA, simple human error while filling out a physical form with a toddler in one arm and the boxes are less than a 1/4 inch apart! Vanguard did not catch this and processed the ‘mid air conversion’ from a Roth to Traditional without batting an eye at it, knowing full well what our plan was all along. Why else would they have suggested opening both accounts? Are there no checks and balances in place? We never received any communication or confirmation that this had even settled. Vanguard’s communication is poor and after 8+ hrs. on hold over three calls, we’re at our wits end.

Over the first few calls, Vanguard advised that this happens all the time and to not worry, they’d take care of it. This is until they found that it was my wife’s, accidental error checking the wrong box. They’re now washing their hands of it and are not willing to budge. The funds settled only 38 days ago and we’re trying everything we can do to get Vanguard to move the funds and allow us to own the mistake, correct any paperwork and move on. Their ‘policy’ is preventing them from doing this. To boot, the RIRA has lost money since hitting Vanguard’s account.

I spoke with our tax preparer, a tax attorney, an IRS tax law advisor at the IRS, the IRS consumer’s advocacy department (who won’t help until next year), the Dept. of Labor, the SEC and finally, FINRA. All stated that only Vanguard can fix this and that it should be a non-issue, as they don’t even submit their 5498 to the IRS until May! The 5498 reporting detail was provided by the IRS tax law rep and she thought Vanguard was being unreasonable – at best. FINRA suggested to file an internal complaint with Vanguard. We’ve since done this with 3 reps and it’s all recorded and documented on their end. We’re waiting on 2x promised management call backs from Vanguard, but I’m not holding my breath for those.

If we don’t hear back from Vanguard management by COB on Monday, then we’re considering filing a formal – FINRA Investor Complaint against Vanguard to advocate on our behalf. Once the FINRA analyst reviews the case (4+ weeks) we may/may not have resolve.

What’s most frustrating is Vanguard knows the fix and all they could tell me was to talk to a tax professional and then ‘call them back and tell them what to do’! This makes no sense.

I am more than confused, frustrated, embarrassed and not in the best position to pay 30% in taxes on the amount anciently settled in the Roth instead of the Traditional. Whole body crossed I don’t have to and somebody on this forum has a suggestion or known path forward. To date, I’ve given this more than a college try and thank you all in advance for racking you brains on this one.

A million thanks!
Zach