There are several types of Rollovers. They did one, just not the best one for you.

• you could have trustee to trustee transfer. This is what you wanted based on your description.

• they can also issue you a check and then have you redeposit it in the allowed timeframe. To do this they don't know if you will just take the cash and run. So they withhold federal taxes.

You need to make up that 4,400 and deposit it with the rest of the money to Schwab and it will be "tax neutral". You will get your $4,400 back at tax return time. If not that $4,400 will be considered a distribution and you will pay penalty and tax on it.

Edit: from the IRS

How do I complete a rollover?

Direct rollover – If you’re getting a distribution from a retirement plan, you can ask your plan administrator to make the payment directly to another retirement plan or to an IRA. Contact your plan administrator for instructions. The administrator may issue your distribution in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.

Trustee-to-trustee transfer– If you’re getting a distribution from an IRA, you can ask the financial institution holding your IRA to make the payment directly from your IRA to another IRA or to a retirement plan. No taxes will be withheld from your transfer amount.

60-day rollover – If a distribution from an IRA or a retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days. Taxes will be withheld from a distribution from a retirement plan (see below), so you’ll have to use other funds to roll over the full amount of the distribution.