Unfortunately, it probably says somewhere in the fine print that they can do this. They probably notified you, but if you moved (or changed emails), you may not have seen it. When you enter your 1099-R, and indicate that you rolled the entire amount over, you won't be taxed on the distribution.
They took 10% tax out, because they are required to do so by law for certain types of accounts. I doubt that the IRS would refund you any of the tax, though maybe it will help your tax situation this year.
Here's more info on Involuntary Distributions.
@dbei
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