401(k) Participant at Fault in Account Withdrawal Dispute

U.S. District Judge Gregory K. Frizzell of the U.S. District Court for the Northern District of Oklahoma declared that it was actually plaintiff William Foster’s own fault that his ex-wife Patricia was able to access the funds.

Even though the plan documents of the PPG Industries Employee Savings Plan required participants to notify the company of any address change, William failed to do so after his 2004 divorce when he left the Tulsa home he and his ex-wife had shared, Frizzell said.

According to the ruling, William found out about the withdrawals after receiving a1099-R form from Fidelity Investments showing a gross plan distribution of $42,126.38 in 2005. Foster demanded the plan replace the money, but the administrator contended the benefits were paid in accordance with plan terms. The administrator countered that the loss was due to William’s failure to notify the plan of his address change and his ex-wife’s fraudulent conduct. William sued the plan over the dispute.

Frizzell recounted in the ruling that the plan mailed a document to the Foster home in early 2005 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.

Patricia 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, according to the opinion, Patricia 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, Patricia drained the account, the court said.

In his ruling, Frizzell rejected William’s argument that by virtue of his years of service, his benefits were vested and were nonforfeitable under the Employee Retirement Income Security Act (ERISA), and so he could enforce his “unconditional” right to benefits against the plan.

The case is Foster v. PPG Industries Inc., N.D. Okla., No. 06-CV-423-GKF-TLW.