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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 16, 2013 at 12:55 pm

I feel she did not have the right to open his mail But even if he opened it, it depends on the circumstances. She should get half of it, after all they were married 11 years, maybe she stayed home and took care of kids and the house, while he worked, or maybe she didn't work or take care of kids or the house then, I feel if that were the case, she didn't deserve half.

Happily Not Hetero
January 16, 2013 at 12:37 pm

1. He is the victim of identity theft.
2. The financial company was complicit in the identity theft.
3. He should sue the financial company for such lax security, he should put up a website denegrating the financial company for their lax security and warning others that they allow themselves open to identity theft if they use that financial company, and he should insist that the police prosecute the witch for ID theft.
4. Since anyone can be a victim like this - seeking expert legal advice when getting a divorce is a MUST.

January 16, 2013 at 11:27 am

Could he take her to any kind of court for theft? I'm sure she'd be entitled to some of them money as his spouse but the rest? What a nasty woman. That must have been a marriage made in heaven. Maybe he deserved to be ripped off. There's two sides to the story.

January 16, 2013 at 11:22 am

Think about this! Now the poor guy has to pay taxes and penalties on the retirement account withdrawals up to 40%!

Claire M.
January 16, 2013 at 10:56 am

So, he didn't notice there was an inordinate amount of GVC boxes arriving at the house (trailer?) on a frighteningly regular basis?

Charlie Lotz
January 16, 2013 at 10:43 am

They were married 11 years,so she may have been due some of it,unless she gave it up in the divorce. She just stole the rest of.

January 16, 2013 at 10:37 am

It would be worth 43 thousand dollars to get rid of the lying nasty heifer he was married to....he should consider this a blessing....and of course he needs to file charges with the local police. The checks would have been made out to him....and if she had elected to use direct would have had to been deposited in a joint account with his name on it. Never trust a woman you are matter whose fault it is that a divorce is on the horizon.

January 16, 2013 at 10:03 am

The ex is the one that should be prosecuted. These types of accounts should require both persons signatures for withdrawl and that would mean she forged his signature. So not only a theft charge but forgery. Not her money.

Air Force Mom
January 16, 2013 at 3:17 am

It is a federal crime to open someone else's mail, that clearly states "Adressee only"

January 16, 2013 at 12:33 am

Why file a suit for theft. How about she is prosecuted and goes to jail for theft. If I read this correctly didn't she steal funds from someone elses account to which she was not entitled.