Q: Legal recourse after $16,000 stolen from 401(k) due to identity theft and incorrect 1099-R issued by Fidelity.
My wife had $16,000 stolen from her 401(k) account with Fidelity following an identity theft incident in June. We were not informed by Fidelity until we discovered the account was blocked in November. We have reported this to the police, Identitytheft.gov, and social security. Fidelity claims to be investigating, but after four months, they haven't provided any updates or refunded the money. Additionally, they issued a 1099-R to the IRS, falsely indicating a withdrawal and creating a tax liability for us. Despite contacting them, they refused to amend the document, citing it as an automatic process. We haven't contacted the IRS yet and are hoping to resolve this before filing taxes. We have frozen my wife's credit with all three agencies and prevented an attempted theft from her IRA. It seems Fidelity's divisions do not communicate, allowing this theft. What legal recourse do we have?
A: If your money is not refunded, you might have a potential negligence claim against Fidelity, which is likely insured for that. Schedule an appointment with a lawyer in your area who handles civil litigation including negligence claims against financial institutions. The lawyer should promptly send a demand letter, if warranted.
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