ERISA, or the Employee Retirement Income Security Act, was enacted to protect the interests of employees participating in employer-sponsored benefit plans. Part of this protection involves the requirement for employers to obtain an ERISA bond. In this blog post, we will delve into the intricacies of ERISA bonds, exploring what they are, why they are essential, and the key details surrounding their implementation.
ERISA bonds, also known as fidelity bonds, are a type of insurance that protects employee benefit plans from losses caused by acts of fraud or dishonesty. These bonds are mandated by the Department of Labor (DOL) to ensure that individuals who handle plan assets act responsibly and ethically. ERISA bonds are a crucial component in safeguarding the financial well-being of employees and the integrity of their benefit plans.
1. Complete and submit application.
2. Pay by Credit or Debit Card.
3. Download your bond instantly! (The bond and receipt will also be emailed to you)
Coverage Details: ERISA bonds must cover all individuals who handle plan funds directly or indirectly. This includes trustees, plan administrators, employees, and anyone else who manages plan assets.
Bond Amount: The required bond amount is generally 10% of the total plan assets, with a minimum coverage of $1,000 per plan. However, the maximum bond amount required is $500,000 for plans with non-qualifying assets.
Non-Qualifying Assets: If the plan holds non-qualifying assets, such as real estate or collectibles, the bond amount must be increased. The DOL provides guidelines for calculating the appropriate bond amount based on these assets.
Purpose of the Bond: ERISA bonds protect employee benefit plans against fraudulent or dishonest acts committed by individuals managing plan assets. This includes theft, embezzlement, forgery, misappropriation, and other fraudulent activities.
Duration: ERISA bonds must be in force throughout the entire period during which an individual is handling plan assets. The coverage should commence on the first day the person handles the assets and extend for the entire duration of their service.