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Woman drains ex’s retirement account

By Barbara Whelehan · Bankrate.com
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 PlanSponsor.com. 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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636 Comments
Gotthumbs
January 15, 2013 at 11:14 pm

The legal approach would be to file a suit against her for theft and have her pay the funds back. I have to imagine that retirement fund distributions were covered in the divorce. She had a moral/ethical/legal obligation to either write 'Not at this address' or forward it. Opening it and the additional steps she took, only justify the decision to divorce her and be rid of that trash. There can be no excuse, and I'm guessing he wasn't behind on any alimony. Funny how stories can have different meaning if you know more facts than what a poor reporter provides.

The other approach will get him a life-time of free room and board, great medical coverage and he won't have to worry about missing his retirement funds.

DAVE
January 15, 2013 at 11:00 pm

THOSE TYPE OF DOCUMENTS SHOULD B SENT BY CERTIFIED MAIL,ONLY THE ADDRESSE CAN RECIEVE IT(NO EXCEPTIONS) ANYBODY COULD HAVE DONE THIS WHO HAD ACCESS TO HIS MAIL. PURE AND SIMPLE CASE OF FRAUD AND IDENITY THEFT. THE EX-WIFE SHOULD BE CHARGED BY THE POSTAL SERVICE AND INS. COMPANY, MADE TO REPAY THE AMOUNT + DAMAGES.

p grut
January 15, 2013 at 10:53 pm

I think someone what be looking at legal problems.

santa barbara
January 15, 2013 at 10:53 pm

Perhaps the divorce court judge will allow him to count the $42,000 as advancement on his alimony payments

Trey
January 15, 2013 at 8:50 pm

The woman should be indicted for fraud. She should be held responsible.

jeff lucas
January 15, 2013 at 7:13 pm

The woman should be charged with identity theft. She should be required to repay the man. The plan provider did nothing wrong. The man needs to take better care of his finances online.

Phil
January 15, 2013 at 7:06 pm

I don't agree with the court at all, and she obviously had to forge his signature, so there is clearly fraud. He should not have received any tax papers from the Plan has he had no constructive receipt of the money. She should be in jail for felony theft.

M.Young
January 15, 2013 at 6:56 pm

Karma will get ya!

Jesse Porraz
January 15, 2013 at 6:53 pm

Whenever I go to Macey's and buy something on my credit card , they ask for I.D. . Couldn't his former employer have extended him this courtesy? The ex should be charged with theft, stealing something that wasn't her's

karen staelens
January 15, 2013 at 6:26 pm

She is nothing more than a common thief I believe someday she will get a just reward