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Woman drains ex’s retirement account

By Barbara Whelehan ·
Friday, December 7, 2012
Posted: 5 pm ET

Divorce is a tough experience, but such hardship doesn't cut you any slack if you don't stay on top of your retirement paperwork, as one poor fellow discovered.

Imagine this scenario: After 11 years of marriage, you and your spouse call it quits and you move out of the house. After you leave, a letter from your former employer is delivered to the house that your ex now resides in. The envelope is clearly marked: "To be opened by addressee only." Your ex opens it and discovers there's a new procedure in place to access your retirement funds online. After following the procedures, your ex drains the account in four months.

This happened to William Foster of Tulsa, Okla. He lost $42,126.38 altogether -- and didn't even find out about it until January of the following year, when he received a tax form from the plan provider reporting a distribution of that amount. Foster sent a letter to his former employer's plan administrator, "claiming potential fraud, as I did not request withdrawal from my plan and I did not authorize any disbursement from this plan," according to court documents.

The 10th U.S. Circuit Court of Appeals concurred with a district court's ruling that the plan was not at fault because it doesn't have to insure against wrongful actions by third parties, according to The court found that the plan isn't under any obligation to pay the benefits twice "because of William Foster's failure to comply with his obligations to ensure the plan had his correct address," according to the report.

Foster neglected to notify his former employer, where he hadn't worked for the previous six years, of his change of address. And now he's out 42 grand.

From the PlanSponsor article by Rebecca Moore:

The court found that the employer and plan did nothing wrong. The decision to process account withdrawals was based on receipt of a procedurally sound request. According to the court's opinion, Foster was fully informed of how the plan would allow him access to his money, and that someone with the correct User ID and PIN would be treated as the legal participant for purposes of processing withdrawals.

Foster failed to notify the plan of his new address until 15 months following his split from his wife. In the meantime, the plan mailed a document to the Foster home describing changes in how participants would access their accounts. It included an explanation of how a User ID created by the participant would replace the Social Security number for identification purposes. Foster's ex-wife received the document and made an online request to put in place a new User ID, which the plan confirmed in April 2005. The following month, she changed the account password, changed the listed permanent address to a post office box and withdrew $4,000 from the account. During the next several months, she drained the account.

Anyone is capable of this type of oversight. Let's learn from this poor guy's mistake and stay on top of our retirement planning paperwork, no matter what may be going on in our lives.

What do you think? Should the court have ruled differently? Should the plan provider cough up his money?


Follow me on Twitter: BWhelehan.

Correction: A previous version of this post identified the plaintiff as Michael Foster. His name is actually William Foster.

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December 21, 2012 at 12:41 am

It is time for people to take responsibility for their mistakes. The company did nothing wrong. Mr. Foster should have been on top of things, and changed his info. immediately. Blaming everyone else for your mistakes is getting really old!!!!!!!!!!!!!

December 20, 2012 at 8:01 pm

So what happened to the ex-wife? Was she charged with anything? I hope so. (That is such an obvious question, why didn't the reporter find out the answer?!)

December 20, 2012 at 4:13 pm

There was certainly some negligence on the Plan's part and they should at the very least put some policies in place to prevent this from happening again.
And if I were the unfortunate husband, I would pursue criminal charges AND civil action. She committed fraud, plain and simple and deserves only what she contributed to it, if she put anything in at all.

Carl Tomplet
December 20, 2012 at 3:11 pm

My take on it is: if she put half she gets half. If she didn't put in at all, she should not be entitled to none of it. I would have filed a civil suit on her.

December 20, 2012 at 2:49 pm

I am correcting my previous post with , he did not help with the up-keep of the house. We own the house jointly but he walked away with 70/30 cut in his favor. And the proceeds from the sale went to creditors. My advice to women, even if you are madly in love, open up a bank account of your own and put money away, if nothing happens you still have nice nest egg. One of my friends still married, 25 years, got scared after what happens to me, is now putting her extra money away in her own account.

December 20, 2012 at 2:37 pm

I know what she did was wrong,but statistics show that women fare
worse off in a divorce. Men make more generally, woman that are divorce after 25-30 years have mainly put their whole life and earning power into this union. Then they are tossed aside and are monetary worse off than their ex. I related to the 58 year old who posted earlier, I had a lawyer(big deal) had to sell the house, due to liens and threats of foreclosure which my ex racked up while we were married.Because I had teenage boys and no support from family I could not earn enough to buy him out. He also would help on repairs on the property which was built in the 40's. He made out like a bandit on the sale of the house, I paid 15,000, to try to keep the house and it did not work, I did not recoup any of the money on the sale. He left us, he is remarried with the other woman, well off, never contacts the boys, I am just living pay check to paycheck, the boys have part time minimium wage jobs. I can not retire ever, I am 62, he is retired.Too busy surviving to look for a gravy boat. Yeah, to tell the truth, if I would have been able to pull something like this off, I would have. I am not bitter, life is actually better without him even if it is harder. All these people on his side better think before you comment not knowing the whole story.

December 20, 2012 at 10:20 am

The address each year should be comfirmed on the plan.

December 19, 2012 at 6:58 pm

Why has he not filed both a criminal complaint and a civil suit against his ex-wife?

Billy Bob
December 19, 2012 at 4:55 pm


December 19, 2012 at 2:33 pm

Get real guys - committing a crime to "get even" is more likely to get you put in jail that do the ex any harm. I'm sure if the man's ex-wife had anything to take, he would have taken her to court. Most crooks spend every cent they steal. He's trying to get his money back and it does no good to sue empty pockets. The only reason to sue the legal deep pockets of a pension plan is because they're the only ones with any money that can be accessed. He may not even be able to find her. If the woman had any sense at all, she skipped town and assumed a new identity rather than do jail time. Even if he can find her he should probably just write the money off as a lost cause and press criminal charges. If he's really lucky they'll send her somewhere to will work off the money she owes him (some but not many states have victim compensation plans although most of them allow criminals to skip out long before they've finished paying back the money they've stolen.) And to "Marie" who suggested using the woman's SS# to commit fraud, how is that any different from what she did? We've only heard one side of this story. His wife might say she did this to "get even" for his beating her or cheating on her or maybe even running up $42K in credit charges on her accounts that she had to pay. Don't rush to judgment in these personal relationship things; the story you get is usually the one that makes the teller look like the wronged party.