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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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Rich M.
January 03, 2013 at 6:20 pm

The article says "his X" I would believe that they were no longer married. Which gives her claim to only 1/2 in NY. Don't know about where they live. I still think it was fraud on her part as shepresented herself as someone else. The provider and the X should be held accountable!

January 03, 2013 at 5:59 pm

Sounds like "Mail Fraud." A wife or ex-wife has no legal right to open mail addressed to the spouse. No different than a stranger doing the same thing.

January 03, 2013 at 5:32 pm

J- no taking responsibility for your own destructive actions that not only hurt your ex, but innocent neighbors, huh? Lame, people shouldn't have to guard against idiot adults acting like children. Karma's coming J...

January 03, 2013 at 5:31 pm

Unfortunately since they were still legally married when she made the distributions, the husband has no legal recourse. She was entitled to the money as his wife. However, if they legally separated with a financial agreement THEN he could've recouped the money.

But I do agree with the court. It is your responsibility to let anyone you do business with know that you've changed addresses.

January 03, 2013 at 5:25 pm

This all goes waaaaay back to when he said *I LOVE YOU*,, and then he said,, *WILL YOU MARRY ME*? so, it is HIS fault.. dont EVER use those words and you will live happily ever after..,

c glass
January 03, 2013 at 4:01 pm

The ex husband ought to be able togo after the wife for theft.

January 03, 2013 at 3:46 pm

And she's not held responsible at all? Let me guess cause she is or was the wife..... WOW Lady ur rotten.....

N. Marie
January 03, 2013 at 3:16 pm

I concur, Chris. That's what I would do.

January 03, 2013 at 1:38 pm

This is the true problem with the Judicial System and the "Intent" of Law! People talk about behavior and yet fail to see the obvious in this case, because this is about more than money, it is about INTENT! When you talk about Domestic Violence, this is a prime example of a clear cut case of a life ruined by vindictive actions and a Justice System condoning those actions! There is obvious criminal behavior but the "loophole" is the failure to connect the pathway for the finance company to complete the transactions so the "behavior" is excused. What moral lesson is learned here?

January 03, 2013 at 12:51 pm

I agree with others here - not the business or plan's fault. Go after the ex for fraud/theft and recover your money that way,