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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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February 05, 2013 at 10:12 am

What is pathetic is the bitter responses that I am reading here. Especially you women, she committed a crime period. If the shoe were on the other foot you would be stating otherwise. So much for a role model for your children.

For starters, she admitted to a crime, a civil suit is the first step then the DA'a office and the police. Then he needs to file a tort claim with the federal gov't with the intent to sue them for dereliction of duty to force them to charge her with mail fraud.

Last but least, return to the divorce judge to file contempt charges against her. She violated the QDRO requirements and be held in contempt. He will receive all of his portion as required by federal law.

February 05, 2013 at 12:06 am

@Virginia Nordsen - "She committed forgery! She signed his name, and the company did not check his signature?"

Where does it say anyone signed anything that could/should have been checked by the Plan Administrator?

With current online processes, one can often get checks sent without ever signing anything, simply by having access to the account's information which the Plan sent to her address.

February 05, 2013 at 12:04 am

It was the fellow's responsibility to keep his information current with the Plan Administrator. That he didn't negates the Plan's responsibility to him for repayment of the money.

However, it doesn't absolve his wife of legal proceedings. This is mail fraud and theft, and he needs to call the Postmaster General and the law in his area to haul her hiney to jail, and then to prison unless she pays it all back.

Anne Childress
February 04, 2013 at 10:30 pm

My kind of girl! Don't get even: get everything!

February 04, 2013 at 10:23 pm

The X wife committed a crime to operate within the law.

February 04, 2013 at 9:49 pm

My ex went to my broker drained my stocks and then drained my bank accounts now starting over at age 45.

James Hawke
February 04, 2013 at 7:27 pm

Very sad story. Perhaps we can all learn from this. The "Plan" Provider needs to be taken to court over their attempt to shirk their responsibility. This was out and out negligence!

February 04, 2013 at 6:54 pm

If it was marked to be opened by addressee only then she committed mail fraud & should be held accountable. good luck getting his money back possibly, but she should be charged.

Virginia Nordin
February 03, 2013 at 10:39 pm

She committed forgery! She signed his name, and the company did not check his signature? That is stupidity and they are liable. They must get the money back from her!

February 03, 2013 at 11:23 am

Anyone who can be married to such an unprincipled thief for 11 years must have known her craft. A fool and his money are soon departed.