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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 6:19 pm

One thing that hasnt been made clear is how the funds were paid to her, was a check issued in his name? Were the funds put in a bank account electronically that didnt have his name on it. if it was paid by check and had his name on it how was she able to negotiate the check. Anyway she should be charged with fraud, probably not much point to sue her, probably get his money back from her if she spent it. Also I believe the plan is responsible for her obtaining the funds, apparently they didnt have enough safeguards in place.

January 10, 2013 at 6:04 pm

His should go to jail for fraud and theft, she clearly wasn't him. Years ago I had IRS sent a $2500 tax return to child support services in Nebr saying I owed back child support which I did no, I had custody of my 2 boys but my ex wife got the check anyway, I called IRS they said not their fault it state of Ne. fault. State said it County's fault. The County told me to tell my wife to send me my money admitting Idid not owe back child support, she already spent it and refused to pay it to me. I had no refund due in fact I paid in $500 IRS had made a mistake and refunded the $500 plus added $2000. 2 years later IRS came after me for $2500 plus interest and said even though my ex got it and shouldnt have.I got to pay it back, so in total makes me out over 5 grand

Lamont George
January 10, 2013 at 5:44 pm

Why do we alibi for women so much?
Let it go says Chinadoll.
Courtney says the ex is "intitle to his retirement" anyway. Oh really? why is that? I think the law says, "She may be "entitled" to a percentage; under certain conditions.
Sam calls it Karma. Wow, how about his ex-spouse stole his money and she should be prosecuted! I believe there are legal remedies available to combat an abusive husband. In this instance however, Karma might be a sympathetic Judge absolving him should he now choose to abuse of his ex. I know I would vote to acquit him if I were on this jury.

January 10, 2013 at 5:41 pm

He should have gone to the police and had his ex-wife arrested for theft and he should sue her civilly to get the money back.

January 10, 2013 at 5:24 pm

Let it go. Lesson learned. By the time he spends money on a lawyer to try and sue her to find out later she was entitled anyway or she may get time, he would have spent more paying the lawyer than she took.

January 10, 2013 at 4:58 pm

she got the house and his retirement money. Wow... spineless little fish.

January 10, 2013 at 4:57 pm

Well, the ex is intitle to his retirement, she just helped herself a little sooner then he expected.

January 10, 2013 at 4:55 pm

Karma... He might have done something to someone a while ago, and now its coming back at him... And just as he did, she will too get what she deserves. As far as we know, he could have been an abusive husband!

January 10, 2013 at 4:47 pm

What goes around comes around

Gerald Hintlian
January 10, 2013 at 4:45 pm

This is the fault of the ex, she should be arrested, tried and convicted of fraud and theft. This is what is called taking responsibility for your own actions, not the Democrook way.