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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 11:40 pm

So, I find it interesting, the company did not have to confirm the individual was the right person?

Just an odd question, what if someone had purposely stole the mail? Would they also have been able to gain access? Considering most SSN are easy to obtain with a simple credit request by name and/or address.

Also, nice that law enforcment did not recognize that the ex represented herself as him, which is classfied as Identy Theft in all 50 States, not to mention she utilized the Post Office through regular mail, and the use of a PO box.

Bill T
December 21, 2012 at 3:43 pm

Obviously, the woman is guilty of fraud. It might even be considered a federal wire fraud charge, since the money was transmitted electronically and might have been sent across state lines. His negligence does not excuse her breaking the law, especially if he has court documents detailing what she does and doesn't get in the property settlement. If the judge ruled she could not have the money in that account, then she can be held liable at least in civil court if not criminal court.

December 21, 2012 at 2:38 pm

So she gets to walk with the $42k and no consequences. Yet, had he withdrew the money and hid it the same judge would have awarded the entire amount to her anyway. Our legal system is such a joke when it comes to protecting the rights of men. Such an injustice. Let's we not even mention the fact that it was a criminal offense.

J Burns
December 21, 2012 at 2:30 pm

The ex-wife should be held liable for the money. She knew it wasn't hers. I was divorced, & my ex had changed his address, but things kept getting sent to my house. I didn't steal from him, though. She is totally at fault. i hope her ex goes for the money.

December 21, 2012 at 2:13 pm

As part of my divorce agreement, I kept my retirement, he kept his. Mail continued coming to the house regarding his account for several months following our split. It would have been very easy for me to steal from him, but not the right thing to do. I agree, she should be prosecuted for her actions or at least made to repay what she stole plus interest.

December 21, 2012 at 1:51 pm

If the letter was intended for a named person and not an address, Why didn't the letter be addresed to the person. The address didn't work for the retirement, Therefore the company is at fault. What would have happen if the letter was lost before it hit the person's mailbox?

December 21, 2012 at 11:25 am

The policies usually require BOTH parties signitures to take any money. She certainly could have done that. If this happened, the ex husband deffinately should file a report on her for fraud. She should be sitting her behind in prison at the least.

December 21, 2012 at 10:53 am

Clearly, this is mail fraud and she should be prosecuted. It's also theft by mail. I can't imagine what kind of person would steal someones' retirement funds. Can't he sue for the house and furnishings for repayment? He has the divorce papers and it is written out for all to see. Take the house! Put her in prison and throw the key away. No wonder he divorced this slime.

Roger W
December 21, 2012 at 9:27 am

Interesting, I refer to the following judicial conclusion:
"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."

Using this logic than if someone were to hack into any account to gain access they would then become a "legal participant". I believe the judge erred in this case. I do not believe it is about whether or not the ex- is entitled, but rather about how she knowingly stole from this account, which she was certainly aware she was no longer entitled to do.

Gabriela Bosak
December 21, 2012 at 9:09 am

The ex-wife should have been sued for mail fraud.