I made the decision a few weeks ago to sign up for an SEP-IRA through Fidelity. The account setup was a breeze (although a glitch in the system caused me to end up with two accounts). Next step - transferring money into the account.

Here’s where things have gotten bizarre. First they ask me to fill out a ‘Money Line’ form with my bank info, attach a voided check, and send it in so they have access to my bank account info and can confirm my account there. Ok, I do that.

About 2 weeks later, I receive confirmation. They have this verification called ‘prenote’ that takes about 5 business days to check with the bank, but afterwards, I’m assured, I’ll be able to transfer money into my account online.

The deadline comes and goes and still, I’m not able to transfer money online from my bank account to my Fidelity account. If I had money in the account, I’d have no problems withdrawing it to my bank account. But the system just won’t let me transfer money into the SEP.

So I call. Perhaps it’s because I set up the account around tax time, but every time I’ve called since setting up the account, I’ve been on hold a minimum of 10 minutes before I can talk to someone. (Once I talk with someone, they’re always pleasant, no matter what the hour.)

This time, I get a nice lady who’s helpful enough to do the transfer over the phone. She then assures me that if I log in tomorrow, I’ll be able to buy securities with my funds ($2000 to start).

A day passes and I log in. Sure enough, I can buy mutual funds. So, I go through the process of purchasing the fund I want. No go - I need a minimum $2500 to buy it. Nowhere in the online research does it actually say this, but ok. Back to step 1 - how to transfer money into the account?

So I call today (I should have waited until tomorrow to beat the tax procrastinators as my hold time was about 25 min total). I talk with a different rep who, like me, is confused why my Money Line won’t let me transfer funds into my account. She then checks into the issue.

The problem now is that I have an SEP-IRA and it’s Fidelity’s policy to discourage contributions into the account via electronic or phone transfer. The best way to add money, she says, is to send in checks. But if I want to talk to someone in trading, they’ll do the electronic transfer over the phone. (She actually said she remembers looking into this before, but it was so long ago that she forgot… I guess SEPs aren’t Fidelity’s core business.)

Now, they only seem to have this policy for SEP-IRAs. If I had a Roth, transferring money online would be no problem.

I finally am connected with the guy from transfers and fill him in on my story. He, too, is confused by all of this and checks with his senior manager.

When he comes back, he confirms that Money Line won’t work for SEPs and explains that Fidelity prefers that people write checks so they have a written record of the transfer. It seems that with an SEP, it’s easy to contribute too much money and Fidelity doesn’t want to deal with the paperwork. However, they believe that if I actually write out a check, I’ll be more aware of how much I’ve already contributed and I won’t over-contribute.

What? Haven’t these people ever heard of the internet? I have online accounts with several credit cards, student loans, and through ING Direct, and all have no problems transferring money from my bank account into my account with them. And I can assure you that they all meticulously record the transaction. I’ve always received confirmation of payment from them, been able to check its status online, and when I download statements into Microsoft Money, it shows up as an electronic transfer.

It just strikes me as odd that they discourage payment transfers into an SEP over the phone or the web when they have no problems allowing these types of contributions for other IRAs.

My rep did do the $500 transfer over the phone, and hopefully by tomorrow or Wed, I’ll have $2500 in the account to buy my first mutual fund, which I can actually do online.

Still, I have to ask - do all financial institutions have such crazy regulations when it comes to SEP-IRAs or did I just pick a particularly difficult one? And if anyone can explain why writing out a check and sending it in is better record keeping than doing it electronically, I’d also love to hear your reasoning. (Is the postal service that much more secure than their own computer system? That’s a scary thought.)