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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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January 04, 2013 at 3:45 pm

She opened his mail and it was addressed to him, that right there is a crime. As far as the plan administrator, no, they aren't at fault, the ex wife is!!

January 04, 2013 at 2:56 pm

That is really sad ! But believe Karma will get her in the end !!

January 04, 2013 at 2:24 pm

This is sad. First of all, she should have contacted him and told
him he had mail at the house. Second, she should have not opened his mail. Just because she is his Ex-Wife, that does not give her the write to opened his mail. Did he give her permission to? Hell no he did not. It is a case of revenge! He is a fool not to change his Address. I know someone like that. After twenty five years of marriage this guy was quick to move to out of the house and into an apartment with this young chick and going back to the house he shared with his wife when she is at work. I.m thinking why don't he change his address and get a PO Box for his mail, because she could do the same thing out of revenge. But she cheated on him first and got a new lover. He still got all his belongings, tool, and equipment and dog at the house. They still got a mortgage on the house. I would not want to be the other woman and all this going on. There is no peace!!!! It is all drama.

January 04, 2013 at 12:38 pm

OK. Not gonna touch whether or not she was entitled to the money..that's a whole 'nother story...but since she drained the accounts, she should be the one who pays the tax. She's the one who has the money..(or, HAD. I'm sure it's long gone now)

January 04, 2013 at 12:37 pm

I did not notice that he filed criminal charges. He does, however, have a tax deductible claim of $3K/year until he has claimed all of the loss or recovered it in whole or in part.

He should file criminal charges against the Ex-wife, and sue for restitution by acquisition of her assets.

Now, it's easy to neglect past things with infrequent reminders, so to prevent these situations, keep your retirement rolled over into some kind of IRA or equivalent, so you only have one thing to keep track of. Just be sure it is with a very reputable company.

Herbert Dearing
January 04, 2013 at 9:59 am

take her to court,Lawyers win again husband loses it will cost him all of it to take her to court lawyers are as big a crook as she is poor guy

January 04, 2013 at 9:21 am

First of all, she already got whatever retirement disbursements she was due at the time of the divorce. Any funds left in his retirement accounts were all his, not half hers at that point. She committed fraud, by creating an identity claiming to be him. She commited theft by a forged instrument. She should go to prison, the courts should sell the house which was awarded to her in the divorce, he should recover his loss from the proceeds of the house. He will have to take action to keep the IRS and Oklahoma Tax Commision from mis-assigning the aproximately 33 percent tax penalty on 42 grand to him. He did not get the benefit of the funds, thus, he should not have the tax liability; but that will be an uphill battle. He needs to immediatly file an injunction against her taking any loans from the value of the house until the "disputed matter" is settled. He should get an injunction against her selling the house or assigning the deed to any other entity. I hope he prevails.

January 04, 2013 at 9:19 am

that makes no sense! Take the spouse out of the scenario. What if it were a new homeowner or another relative? This is a classic case of identity theft. There should be tighter security measures for online withdrawals especially for taxable withdrawals! He should file a police report against his spouse as well.

January 04, 2013 at 7:00 am

yep she deserves half but greed took over sounds like a court case to me.

January 04, 2013 at 1:27 am

After 10 years of legal marriage either spouse gets half that pension, yea take her to court she is a horrible theif.