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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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Nannie Oakley
December 23, 2012 at 11:16 pm

She stole his money. Hire lawyer and take her for everything penny of what she stole from him. No mention of this being a crime but it is. Once she is not married, no longer the community property thing is in affect. I hope he sues her.

Mark Russell
December 23, 2012 at 8:39 pm

Ha ha ha ha.

Marie Bernard
December 23, 2012 at 9:04 am

In Louisiana, the property settlement can take years and there is no requirement that it be effected at the time of divorce. Other states require that it be done before a judge will grant a judgment of divorce.

December 23, 2012 at 1:13 am

Her draining the account is not a crime?

December 23, 2012 at 12:55 am

Certainly the funds were accounted for in the divorce - if it had been finalized.
If not go get your money brother.
Anyway, the little lady owes tax on it.
For starters, remind the IRS.
Just had to do that for my ex.

Woody Ramseur
December 22, 2012 at 10:32 pm

lock her up and throw away the key..she is very dangerous and a menace to society!a thief in the worst way!

December 22, 2012 at 8:07 pm

This is an easy civil case, she committed fraud and stole his assets. Most attorneys will take this case because they could liquidate her assets in the end and still apply garnishments and liens. He me in fact end up better off in the long run. I would seek a criminal judgement with no jail time so long as she pays garnishments or surrenders assets.

Carol Bartow
December 22, 2012 at 3:57 pm

This is wrong, she used his name and signed in as her husband with out his knowing. She rec. the check and must have signed the check for him. That's fraud. The judge should had her re pay all the money for what she did. Divorce or not. The retirement compnay did nothing wrong, they had no idea that the wife was using her husband ID information. Just wrong. GET A GOOD lawyer. Fight it.

Johnnybe good2
December 22, 2012 at 10:38 am

This is not right. The court found no evidence of wrong due to the fact that the company was negligent in proving an action of the reciever to be legitimate. Under contract law discovery precedes any action of law for redress of that decision. The man can demand his money back and get it and also sue for any distress because the money was his and not his wife's regardless whom removed it wife or thief. Safeguards are part of our law and protection and must be part of any corporation's ability to control its finances output for reliability. The company and judge were negligent. Case closed.

December 22, 2012 at 9:31 am

since they are getting divorced half the money is hers, however, 21g is his. If the divorce is final and no mention of the account was made, then the 42g is his. If it is included in the split 50/50 then she owes him 21g. She could also be charged with theft and wire fraud at least.