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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 15, 2013 at 6:26 pm

She is guilty of fraud. four different times. he should sue for mail fraud and Grand Larceny.

January 15, 2013 at 5:10 pm

I would think that she committed a federal crime by opening his mail and should prosecute to the full extent allowed by law.

January 15, 2013 at 4:48 pm

PLEASE stop throwing GODS name up as fix all.Its not.Maybe GOD told her to take his $$So now what?

frank edwards
January 15, 2013 at 3:51 pm

an ex-wife drained my business account of $8,000, which she used to pay her divorce attorney to process the divorce. It all but financially buried the bakery business we were operating at the time.

January 15, 2013 at 3:39 pm

The plan achieved due diligence by asking for various items of data that the woman had.

He needs to go after his ex-wife for the full amount. The plan shouldn't be held responsible for her fraud and his negligence.

January 15, 2013 at 3:30 pm

Annie, what? No seriously, what?

Greg O’Flynn
January 15, 2013 at 3:15 pm

Dear Occupant. Here's $42,126.38 for you to use with no further obligation. Simply follow these steps to cash out this retirement savings account. Sincerely, Plan Administrator.

January 15, 2013 at 3:13 pm

She could be liable for a mail crime, tax evasion(if she didn't declare), maybe even forgery(signed his name?).

Allen Freeman
January 15, 2013 at 1:52 pm

Annie, how dare you you say what the Lord will do. It may be wrong of her to do that, but 2nd guessing what the Lord will do
is just as bad.

Annie Dennis brown
January 15, 2013 at 12:45 pm

Mr Williams frosted I am so sorry to hear this but let me tell you what to do put it in God hands he will fix her that is wrong to do any one like that like the Lord say vinter is his she will get hers I sorry this happen to u I will keep you in my prayer