Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

ERISA Bonding Requirements: What You Should Know as a Plan Fiduciary

Every fiduciary and every person who handles funds or property of an employee benefit plan must be bonded. In general, as a fiduciary you must be bonded up to 10% of the amount of the funds in the Plan up to a maximum of $500,000 (in most instances). This bond is required by the ERISA to help protect employees in the plan against losses to their plan due to any fraud or dishonesty.

It is very important that you as a plan fiduciary (therefore plan official) to look over the guidance related to these bonding requirements to make sure you have adequate bonding! You are ultimately responsible if something was to happen and the plan was not bonded. The US Department of Labor has issued Field Assistance Bulletin No. 2008-04 that has guidance regarding ERISA Fidelity bonding requirements. (http://www.dol.gov/ebsa/regs/fab2008-4.html)

Shelby Williams

Comments

  1. C. Gonzalez says:

    Good information! Yes, these are a ‘must have’. These bonds are fairly easy to get UNLESS the plan has significant levels of non-qualifying assets, cover ESOPs, or are multi-employer or labor union plans. If it is “outside of the box”, most insurers will just decline them. I have to recommend ERISA-bonds.com. The organization offers superlative service and handles all of those difficult bond placements.