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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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Steve Catanich
January 03, 2013 at 11:36 am

The woman should be prosecuted for fraud. And I am certain that there are civil remedies available to the man, and under the circumstances, if he prevails, I also believe that he could collect punitive damages and legal costs. Fraud is Fraud and Forgery is Forgery.

January 03, 2013 at 10:15 am

He might be able to get her for mail fraud. It is a crime to open mail not addressed to you, especially when marked as to be opened by addressee only. Might not get his money back but might get some vengeful satisfaction!

January 03, 2013 at 5:07 am

He should have filed charges of theft against his ex. Whether or not that works, file a motion in family court to adjust any alimony &/or child support to account for what she stole.

January 03, 2013 at 5:03 am

What U all fail to realize is that all that money was made while they were married... She gets half... lol... & if there are kids involved well, he gets nothing for shear stupidness.. amen

January 02, 2013 at 11:15 pm

The Plan and Employer did nothing wrong; the Court ruled correctly. The man does have a case against his wife, though. (But how you're able to "forget" about a $42K account for 15 months is beyond me.)

January 02, 2013 at 10:15 pm

10th U.S. Circuit Court of Appeals is wrong. After all it's not their money being stolen ! This women committed "fraud by deception",and should return the money,and go to jail for life.Equal Justice under the law? Not in Tulsa, Okla.

January 02, 2013 at 10:12 pm

Poor Security methodology by plan administrator. Ex-wife should be charged with theft and made to repay and face legal consequences. Wake up, guy!!! Quit beind a victim!!!

Smack Dab
January 02, 2013 at 10:09 pm

Don't see a problem here. She stole the money. She should be arrested and charged with grand theft, doesn't matter how she acquired the money from her ex. The money was not hers, she stole it. End of story.

Donald E. Bowen
January 02, 2013 at 9:58 pm

First: Consult a Lawyer as to divorce law. If you were devorced in a Community Property State after all the Assets were divided, bank accounts, realistate, ect; then I would believe she has willfully committed a fellony by using information that gained personal information and assets not rightfully hers. If this was on an Inventory of assets, then she would only be allowed 1/2 of the community property I believe. If you are the sole owner of the asset in a State by law then, the information she used as an Ex-Spouse information, or in words," Identification Theft and wrongfull access to and recieving moneys not rightfully hers! Just as if knowingly having access to car keys not theirs and taking the car without permission from the owner! Is it considered Grand Theft Auto? Wrong any way you precieve it to be! With Malice! It is up to you and your legal adviser to determine what legal actions are which would recover the loss and legal expenses and anything else allowed by law.I may not give you legal advice, but I may relate to contact legal advice and the Law Library of your county and state where you reside.Consult your County Attorey to file charges if determined!!!

January 02, 2013 at 8:43 pm

the plan should require more than changing a password/ from a letter through the mail. very easy to get spouses information.
i think they should have some responsibility.. at least in changing their ways going forward for more security info.