What is an ERISA Fidelity Bond, and why do you need it?
The Employee Retirement Income Security Act of 1974 (ERISA) states that: “Every fiduciary of an employee benefit plan and every person who handles funds or other property of such plan…shall be bonded”.
Put simply, an ERISA Fidelity Bond helps you comply with the law and provides coverage for your employee benefit plan or 401(k), assisting in protecting the plan and its participants against fraud or dishonesty by the bonded trustee or fiduciary.
What are the Required Limits?*
ERISA requires that fiduciaries have bond coverage valued at an amount that is at least:
- 10% of the plan assets handled
- $1,000 and not greater than $1,000,000
* Does not take into consideration non-qualified assets as determined by statute
What are the Risks of Not Having Bond Coverage?
If you do not have ERISA Fidelity Bond coverage and you are a victim of an embezzlement involving assets of your sponsored benefit plan, you could end up paying losses out of company funds, as well as pay fines or penalties for not being in compliance with ERISA. The total cost of the losses and fines could be substantial.