Learn more about ERISA bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are ERISA Bonds?
ERISA bonds are a form of fidelity bond designed to protect employee benefit plans from financial loss resulting from fraud, mismanagement, or theft committed by the individuals managing funds for the plan. The name comes from the 1974 Employee Retirement Income Security Act (ERISA) that was passed by Congress to regulate employee benefit plans. One of the features of this legislation is a bonding requirement for plan fiduciaries and those managing plan assets.
Who Needs Them?
ERISA imposes a bonding requirement on those who have fiduciary responsibilities over an employee-sponsored benefit plan or who are otherwise involved in overseeing an employee benefit plan.
This includes (but is not limited to) anyone who has:
Physical contact with cash, checks or assets belonging to the plan
The authority to transfer funds out of the plan
The authority to direct disbursements from the plan
The authority to sign checks drawn against the plan’s funds
How Do They Work?
ERISA bonds provide protection for those who have or are contributing to an employer-sponsored retirement account, such as a 401(k). The bond guarantees that fund assets lost to embezzlement or mismanagement will be replaced by the surety company that issued the bond. Consequently, plan participants will not suffer a financial loss.
What Do They Cost?
Each plan official must be bonded for a minimum of 10% of the amount that person is responsible for handling, up to a maximum bond amount of $500,000 per official. An employer has the option of purchasing a larger bond amount if desired.
The required bond amount also depends on what assets are held in the retirement plan. For example, a higher bond amount is required for officials managing retirement plans that hold the company’s own securities. It may also be higher for those that hold art, real estate, mortgages, and other non-qualifying assets. Whether the plan’s assets are held within or outside of a regulated institution like a bank or insurance company also has an effect on the required bond amount. The amount of each fiduciary’s ERISA bond will change with increases or decreases in the retirement plan’s assets.
The premium cost for the bond is a small percentage of the required bond amount. That percentage is determined on a case-by-case basis depending on the class of business and the number of fiduciaries and authorities that need to be covered. Noe that the ERISA legislation allows bond premiums to be paid from the plan’s funds.
We stand ready to get you the ERISA bond you need at a very affordable rate. Complete our convenient online application form to get started!
"Since 2001, I have jumped through hoops every 2-years come bond renewal time. With Absolute Surety and their user-friendly online application form, it was all done in MINUTES! Highly Recommended!!!"
Sean McCabe, Orlando