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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 26, 2012 at 12:31 am

Isn't it a crime to open mail addressed to another person?

December 25, 2012 at 6:55 pm

Why not sue the ex? The have laws that protect against that, including identity theft and grand larceny theft. She she be facing some jail time and restitution... if she has anything. I'd take her for everything she has and then some..

December 25, 2012 at 12:00 pm

No, plan is at fault as well. There is a signature and proof of identify required for disbursement and when that kind of money is involved, they have a responsibility as caretaker for those funds to ensure they are only distributed to their rightful owner.

Certainly, the ex committed fraud and should be punished for violation of 18 USC 1001, false statements for likely impersonating her ex-husband to access the funds...the US Attorney should be all over this...

john nolan
December 25, 2012 at 11:57 am

The Court ruled correctly and the plan is off the hook. This illustrates how easy it is in our electronic world to be cheated out of your savings and more. One issue which is not mentioned is whether or not Mike had any agreement in place with his ex that covered the division of martital assets. If such an agreement was in place declaring this fund was not hers she took somethng she wasn't entilted to, if no agreement she got the money to bad, or one last question, did Mike not put the fund on the table at the time of separation? There are a few cards missing from this deck.

Jan Jones
December 25, 2012 at 10:41 am

This is ridiculous. Of course the plan isn't at fault. But what about the woman who drained the account? She stole this money. No difference between what she did and robbing a bank. Why hasn't she been charged? And why hasn't she been ordered to make restitution? I can't believe there's no mention of the consequences she's going to face! Please don't tell me this felon is going to get away with this!

Shirley JD
December 25, 2012 at 8:46 am

This is so typical. Women are nothing but golddiggers. They hate men. All they care about is men's money. I am so ashamed to be female.

spanky McMonkey
December 25, 2012 at 8:04 am

The courts are always going to find the banks not at fault, have you ever heard otherwise? he should be able to sue the ex and file charges since this is grand theft, maybe he'll get his house back. stupid mistake on his part though.

December 25, 2012 at 6:43 am

Interesting article. The bank is blameless because the client did not notify the bank of his change of address. My situation is reversed - but the bank still seems blameless and non-responsive to my objections.

My line of credit on my home equity is secured by an annual FEMA flood insurance policy. The bank notifies its customers of this requirement annually. However, the bank sent this notification to my son's address and it was returned to the bank as undelivered. On more than one occasion. To cut a long story short (there is more if you are interested) The bank took out a policy and charged me for the exorbitant premium because I had not responded to their letters. Duh!!

Is there a banking ombudsman that I can approach with regard to this? I know there is the BBB...

December 25, 2012 at 4:52 am

She Stole the money but what goes comes around. I have never in my 40 years of people watching ever known anyone to come out ahead you keep losing, till you've lost 10X the amount you stole. She should get ready to reap the whirl wind.

Linda J Atamian
December 24, 2012 at 1:57 pm

This woman is a felon. She should be forced to give back all the money she stole. The ex-spouse should sue her.