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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 8:48 pm

My take? She is guilty of fraud and theft but he obviously didn't pursue her because she has probably already spent the money and he figured he had no hope of reclaiming a penny even if successfully litigated. Therefore, he chose to sue the retirement agent. I've never heard of an instance where a spouse has any legal right to their spouse's "retirement" funds unless so designated in a will or as a result of a divorce settlement. That money is his, not theirs, even in the case of a divorce.

January 10, 2013 at 8:15 pm

Wouldn't the criminal charge be "Theft by taking" Also he should seek civil damages.

January 10, 2013 at 7:58 pm

My ex-wife did this as well and spent all the money. The court didnt care because she was the woman. She has to pay the tax penalty and thats it. Its time to make men equal to women,

January 10, 2013 at 7:38 pm

Isn't tampering with the mail a Federal Offense??? If that letter was to be opened by "addressee only". it sure wasn't here.

January 10, 2013 at 7:33 pm

I don't think she is entitled to his entire retirement fund. The money should have been discussed at the time of the divorce. If she is entitled to any of it at all it would be half. She is just greedy. She got the house and who knows what else. It is against the law to open mail that is not addressed to you. The Post Master should be on her case also. He should sue to recoup what money he should have gotten from the start!

January 10, 2013 at 7:09 pm

If a man did that to his wife he'd be in jail by now.

That woman is scum and should be prosecuted.

January 10, 2013 at 7:07 pm

Nice diversion, Pam. Your comment is like saying "the bank robber should be very afraid because his victim, the bank teller, might be mentally unstable!"

January 10, 2013 at 7:02 pm

She should be arrested and ordered to return all the money. Because he should not have been so careless yo let her get into his affairs like that if they are no longer together! That is cruel. I think you shouldn't have to share that money with your spouse because they didn't work for it. She was a gold-digger and deserves to be punished!

Bruke Devore
January 10, 2013 at 6:39 pm

I agree with Gerald, she should be arrested for fraud.

The sharing of the retirement should be settled in the divorce proceedings and it does not mean she can steal from him

no wonder they are divorced

January 10, 2013 at 6:33 pm

She should be afraid this might get to him so bad he loses his mind. If he was abusive she should be very afraid