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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 10, 2013 at 10:11 am

Actually, I believe this would constitute mail fraud, would it not, as the ex opened mail that was not addressed to her and then acted on information contained within it for financial gain.

January 10, 2013 at 9:47 am

What his ex-wife did was fraud, she should be prosecuted and made to pay ever dime back including the earling withdrawal tax & penatly

January 10, 2013 at 9:29 am

IT's simple. This is theft. She should be prosecuted.

Bill Wilson
January 10, 2013 at 9:25 am

They must of went in together on a cheap divorce lawyer.

January 10, 2013 at 9:22 am

Obviously this guy wasn't questioning why he wasn't getting his quarterly statements. One of the FIRST things one does when they move is to notify their retirement plan. Really how hard is that? I check my plan every single month, I don't rely or wait for the quarterly report. While I feel sorry for the guy, it truly is his own fault. Divorce can be nasty as in this case and one should NEVER trust the ex when it comes to money.

January 10, 2013 at 9:12 am

She should be made to pay the money back!!

January 10, 2013 at 9:11 am

Lock her up until she pays back all of th emoney!!

January 10, 2013 at 8:32 am

The ex-spouse here likely violated the terms of her divorce decree (a civil matter), and clearly committed fraud on the bank and on the ex-husband (a criminal matter), but the ex-husband did not go after her most likely because - wait for it! - she doesn't have any money! And this court has the cojones to do the right thing - leave the problem with the person with the greatest interest in the outcome - the husband. Right result. However, the wife should be prosecuted and jailed if prosecuting stolen identity crime means anything.

January 10, 2013 at 12:15 am

she needs to pay the money back and go to jail

January 09, 2013 at 11:55 pm

As a victim of identity theft i can sympathize with the gentilmen whose ex drained his account. It pays to keep track of all monies you have by reviewing monthly statements and communicating with the bank