What are ERISA Bonds?
ERISA bonds, also known as fidelity bonds, are required by the Employee Retirement Income Security Act of 1974 (ERISA) for all fiduciaries of employee benefit plans. Fiduciaries are individuals or organizations that have the responsibility to manage plan assets or make decisions about plan investments.
The purpose of ERISA bonds is to protect plan participants and beneficiaries from financial losses caused by fraud or dishonesty by fiduciaries. ERISA bonds are issued by surety companies, which are financial institutions that guarantee the performance of contracts.
The amount of the bond required for a particular plan depends on the value of the plan’s assets. The minimum bond amount is $1,000, and the maximum bond amount is $500,000 per plan official.
If a fiduciary commits fraud or dishonesty and causes losses to the plan, the plan participants and beneficiaries can file a claim against the fiduciary’s ERISA bond. The surety company will investigate the claim and, if it is valid, will pay the plan participants and beneficiaries up to the amount of the bond. The surety company may then seek reimbursement from the fiduciary.
ERISA bonds are an important part of the system of protections for participants and beneficiaries of employee benefit plans. By requiring fiduciaries to obtain ERISA bonds, ERISA helps to deter fraud and dishonesty and to ensure that plan assets are used for the benefit of participants and beneficiaries.
Here are some examples of the types of losses that ERISA bonds can protect against:
- Theft of plan assets
- Embezzlement of plan assets
- Forgery of documents
- Misappropriation of plan assets
- Fraudulent investments
- Breach of fiduciary duty
If you are a participant or beneficiary of an employee benefit plan, you should be aware that the plan is required to have ERISA bonds in place. These bonds are an important part of the system of protections that is designed to protect your retirement savings.
How to Obtain an ERISA Bond
At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:
- Complete the easy to navigate and secure online application. 1
- Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.
- Sign some paperwork and pay the bond premium
Once these steps have been completed, the ERISA Bond will be shipped to the bond applicant.
1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.
Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003. This type of bond is instant issue, meaning there is no credit check. The bond can be quoted in a matter of hours and can be delivered the next business day.
Blog post: Top 3 ERISA Fidelity Bond Questions Answered
What Bond Amount Do I Need?
The bond amount should be a minimum of 10% of the amount of the funds handled the previous year. The ERISA bond offered by Surety1 includes “Inflation Guard” which offers automatic increases in the bond amount if the value of the assets increase during the term of the bond, without increasing the premium!