The Employee Retirement Income Security Act, referred to as ERISA, provides specific guidelines and standards for employee benefit plans for the private sector and for individuals who manage and control their own assets and investments. The U.S. Department of Labor manages ERISA in order to ensure the public funds for private pension and benefit plans are not to be misused and abused.
An ERISA bond is one of the requirements for those who privately manage and plan funds and other property. These individuals must be covered by a fidelity bond in order to ensure the plan is protected from financial and legal losses resulting from dishonesty or misconduct. Types of fraud or misconduct includes forgery, embezzlement, wrongful abstraction, larceny, and much more. Every individual that handles funds of an employee benefit plan must be bonded.
Generally, ERISA regulations require all employee benefit plans to be covered by an ERISA bond. Buying an ERISA bond is one of the most routine steps of setting up a 401(K) plan. The main purpose of the ERISA is to protect the 401(K) plan from losses caused by fraudulent acts by those who hold fiduciary responsibilities. The ERISA bond ensures the funds are secure and in the hands of trusted individuals. For a company, being bonded means the 401(K) plan and the employees and their funds are protected.
The ERISA bond must be in the name of the retirement plan or trust. Or, the name must identify the plan in some way so the representatives can make a claim against it if need be. Depending on the plan asset total, the bond must be fixed annually for each fiduciary. These requirements are stated in the statutory provisions of ERISA section 412.
To apply for this bond along with other bond types, go to Surety1’s online application page.