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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 05, 2013 at 12:26 am

If the original letter is marked "to be opened by addressee only" and it had his name as part of the address, then she is guilty of mail fraud. Legally it should have went to him and she knows it.

January 04, 2013 at 10:38 pm

They should give her 20 years in jail and transfer everything she has to her ex-husband.

January 04, 2013 at 8:53 pm

He definitely should take whatever course is available to him to collect from her. He not only has the tax liability but probably an early withdrawal penalty of 10% if he is less than 59-1/2 years of age. Were the withdrawals considered loans against his account? Most plans only allow loans up to 50% of the value of the account and that must be repaid with interest. His plan administrator's fiduciary responsibility to him as the former employer is in question and should be further investigated. Even though the plan allows electronic access to the account, they should have procedures in place to obtain/verify signatures from him as well as his spouse for any withdrawals. Divorce does not necessarilty mean that 100% belongs to him unless it was stipulated in the divorce papers that she agreed to relinquish her share of the proceeds. He needs to find a good attorney who is knowledgeable in the area of retirement plans in his area. I am a woman and am totally against this type of dishonesty either by the man or the woman. And yes he had responsibility for advising of his change of address. How many men and women neglect to change their addresses and life insuranced beneficiaries when going through a divorce?

January 04, 2013 at 8:43 pm

Right there, you have one count of mail fraud, one count of wire fraud, one count of unlawful computer access, one count of identity theft. She's looking at some serious jail time. If I were him, I'd find a good lawyer, and serve her with a wage garnishment, and have a marshall attach any bank accounts she owns or wages she earns.

January 04, 2013 at 7:50 pm

He should have some legal recourse here. She opened mail that was specifically addressed to him. She went online and changed information and stole the money. It's theft. She should have to pay every penny back, and if she is employed, her wages can be garnished. I say he needs to find a good lawyer and go after her.

January 04, 2013 at 6:07 pm

I am on the fence with this one. The company should have better authentication verification for something like this. Sounds like it was way to easy to gain access to his account. Which the ex would not known about it had she not open his mail.

A letter like that should be sent signature required, perhaps she would have thought differently then. Yes that could be faked but may give pause.

If I was that guy I would have a lawyer ask the company to prtove they sent the letter, they can't because they sent it snail mail

January 04, 2013 at 5:35 pm

I agree with tb. The letter was clearly stated to be opened by the addressee only, That could be a federal offense by tampering with the mail. Yes, he should have notified his employer of a change of address, but she had no right to open his mail.

January 04, 2013 at 5:34 pm

So it is alright for a man to leave his loyal wife, sap her accounts and destroy her credit with his spending? Thanks for confirming that for me.

January 04, 2013 at 5:14 pm

This is an prime example of how the courts illegally side with women in a domestic case when in fact, criminal intentions are that of the woman... unbeleivably so legal evil... where are the protections affoded to all? where is this country going ? same place as men in this situation, working till we're all dead... prosecute her if she fails to return the funds... she's shown her true intentions to not be true and to be of criminal mind, no different than any other criminals intentions on the streets.

January 04, 2013 at 5:10 pm

I went through a similar situ. My ex's legal beagle advised her of many wrongful things ( cusp of illegal), something I did not beleive my ex capable of. Just goes to show you guys, anything that can bleed for a week once a month and doesn't die, never trust. On another note, I would believe in this dom case, the ex, if in fact she was legally ex'ed at the time, would be no different than how the laws would apply to fraud to anyone. Mail fraud, count 1, financial fraud with intent to harm count 2, fraud by deception count 3 and on and on etc. The reality here is, that she broke the laws with intent, she needs to have justice served her. The fund agents, and I've had the same issue breaks the laws by disclosing directly to anyone via the very uspo laws in place by sending communcations openly and with intent to open access a secured account ( FTC FIC etc laws )should be responsible in such a liability as the costs fo recovery a minimum if nto all costs plus damages. THe entire matter could be handled via lawyers who are not free, and the laws, unfortunately fellas, does seem to overly protect the woman beyond the course of due processes and far left of our legal rights as persons. Seems the courts, no matter how criminal a woman is, side with woman when it comes to life welfare we've worked our lives to build. Just sayin and truly isnt fair. I lost a family, 12mil business and she walked pocketing 1.3mil and filing bankruptcy tossing all the 850k in debt to me... now, I live a life paying for her actions. Yes, karma will be cruel to her but I dont waste my time waiting for revenge cause the shark is in the water...