Michael Foster of Tulsa, Oklahoma learned the hard way that it is important to maintain your retirement documents even amidst your own personal struggles. After 11 years of marriage, Foster and his wife divorced. Foster moved out of his house at some point in time and forgot to change his address. Afterwards, his former employer mailed him a letter with the printed type: “To be opened by addressee only.” His ex-wife found the letter, which contained information that the owner of the retirement policy could now access funds online. Foster’s ex-wife followed the procedure in the letter and drained Foster’s entire account in about four months. According to Bankrate.com, “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.”
When Foster tried to recover the money from his former company claiming potential fraud, the district court and the Tenth Circuit Court of Appeals agreed that the plan was not a fault and that the company did not have to insure against the wrongful actions of third parties. The court of appeals also stated that his employer did not have to compensate for his negligence and failure to update his address.
See Barbara Whelehan, Woman Drains Ex’s Retirement Account, Retirement Blog, Dec. 7, 2012.
Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.
