COLLECTED WISDOM™ on ERISA Bonding
ERISA bonding requirements are quite voluminous and complex, so it is important that all plan sponsors and fiduciaries understand the requirements.
This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.
If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
One of those annual retirement plan housekeeping matters is for plan sponsors to review the adequacy of the plan's fidelity bond required by Department of Labor regulations. Here is a summary of the fidelity bond rules and some issues to be concerned about.
ERISA fidelity bonds and fiduciary liability insurance are not the same. Both serve to mitigate risk for fiduciaries and are critical aspects of an employee benefits plan. The difference between the two lies in the risks that they cover. Are you looking to protect your employees from criminal acts or the company from legal liability?
Source: Graydon.law, June 2023
Almost every sponsor of every tax-qualified retirement plan must obtain a fidelity bond under section 412 of ERISA. Despite the broad application of this requirement, a surprising number of plan sponsors are unaware of this requirement and do not have a bond at all or do not have a bond in the proper amount. This article helps explain the requirement to ensure that those who are subject to this requirement satisfy it.
Source: Legacyrsllc.com, June 2023
Section 412 of ERISA requires every person who handles funds or other property of a plan to be bonded (excluding certain exempted individuals). Such persons include plan fiduciaries but may also include any director, officer, or employee of the fiduciary. It is highly recommended that each plan sponsor frequently assess the bonding coverage to comply with requirements and to prevent any associated risks. ERISA does not require fiduciary liability insurance, however, it should also be considered as protection against fiduciary breaches.
Source: Eisneramper.com, June 2022
ERISA bonding requirements and compliance testing, although not necessarily related, are two of the compliance matters auditors commonly look at during an audit. It is important for plan fiduciaries to be aware of the overall purpose of the bonding requirements and the compliance tests and be familiar with the correction methods and deadlines.
Source: Berrydunn.com, November 2021
An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty: larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, willful misapplication and other acts. An ERISA fidelity bond is not the same thing as fiduciary liability insurance.
Source: Ntsa-net.org, October 2019
Plan Administrators often ask me to explain the difference between a fidelity bond, which is required, and fiduciary liability insurance, which is optional. These coverages are not the same and it is important to understand the difference between them.
Source: Consultrms.com, May 2019
Citing evidence of noncompliance with ERISA requirement that retirement plans to be covered by fidelity bonds, the ERISA Advisory Council is recommending that the Department of Labor relaunch the updated rules it published in Field Assistance Bulletin 2008-04, this time focusing directly on plan sponsors and other plan officials and plan service providers as the targeted audience.
Source: Planadviser.com, April 2019
If you are working with ERISA plans, you will need to respond to questions from your employer clients about meeting the mandatory bonding requirements which must cover any employee handling assets of the plan. Once you tell your employer client that ERISA requires that such employees be covered under a bond, the employer will ask a number of questions reviewed here.
Source: Ntsa-net.org, October 2018
Almost every sponsor of every tax-qualified retirement plan must obtain a fidelity bond in accordance with section 412 of ERISA. Despite the broad application of this requirement, a surprising number of plan sponsors are unaware of this requirement and, in fact, do not have a bond at all or do not have a bond in the proper amount. This article helps explain the requirement to ensure that those who are subject to this requirement satisfy it.
Source: Legacyrsllc.com, July 2018
ERISA bonding requirements can often be confusing, so it is important that all plan fiduciaries understand the requirements in order to make sure their current fidelity bond is in compliance with the current rules and regulations. Plans should have ERISA fidelity bond coverage from an approved provider as of the beginning of the plan reporting period with a coverage amount in accordance with the regulations.
Source: Withum.com, March 2018
One of the basic requirements of ERISA is that all fiduciaries and other persons who handle plan funds must be bonded to protect the plan against losses due to their fraud and dishonesty. The bond is not the same as fiduciary liability insurance. There are special requirements that apply to ERISA bonds and they can only be purchased from approved companies, so even if you have a bond, it might not be compliant.
Source: Cohenbuckmann.com, January 2018
Almost every sponsor of every tax-qualified retirement plan must obtain a fidelity bond in accordance with section 412 of ERISA. This article helps explain the requirement in order to attempt to ensure that those who are subject to this requirement satisfy it.
Source: Legacyrsllc.com, July 2017
One of the most important and least understood aspects of plan administration is the requirement that those who handle plan funds and other property be covered by a fidelity bond. Here are five things you may not know about ERISA fidelity bonding and may be getting wrong.
Source: Napa-net.org, May 2017
As a small business owner sponsoring a 401k retirement plan, are your personal assets at risk? What kind of coverage can you get with Fiduciary Liability Insurance and how does it differ from the required ERISA Fidelity Bond?
Source: Rpgconsultants.com, April 2017
The Department of Labor is launching an initiative to contact plan sponsors who appear to have no fidelity bond, or an insufficient amount of bonding as reported on the Form 5500. The DOL will contact the plan sponsor and allow 15 days for them to obtain sufficient bonding. Proof of the bonding must be sent back to the DOL, or risk a citation from the DOL.
Source: Aktrps.com, August 2015
This article provides an overview of the fidelity bonding requirements. It highlights key elements that employers and other plan sponsors should know about ERISA's fidelity bonding requirements. The questions and answers provide general information to help you understand the law and the fidelity bonding requirements.
Source: 401khelpcenter.com, April 2015
If your company offers a retirement plan to its employees, make sure you are familiar with the ERISA's fidelity bonding requirements and the information you must include on your plan's annual Form 5500.
Source: Deardrebit.com, February 2015
If you are working with ERISA plans, you will need to respond to questions from your employer clients about meeting the mandatory bonding requirements which must cover any employee handling assets of the plan. Here are answers to several key questions.
Source: Ntsa-net.org, January 2015
ERISA's bonding requirements are intended to protect employee benefit plans from risk of loss due to fraud or dishonesty on the part of persons who handle plan funds or other property. Such bonds may only be placed with a surety or reinsurer approved by the Treasury Department.
Source: Napa-net.org, November 2014
Video offers one best practice to take the "scare" out of your plan's fidelity bond.
Source: Erisasunscreen.com, November 2014
If you are a fiduciary with respect to your company retirement plan, you are personally liable for any losses incurred by the plan due to a fiduciary breach. Consider the dollar value of assets in your plan and the degree of your personal liability. How do you protect yourself, as well as the plan participants, from losses due to fraud or dishonesty?
Source: Aktrps.com, April 2014
Every insurance policy is unique, having its own terms, conditions, and limitations. It is very important that employers understand completely the protection their policies provide. Here are some questions you should ask.
Source: Fiduciaryplangovernance.com, January 2014
ERISA bonds are required to be maintained under federal law for the benefit of employee benefit plan to which they relate. When a claim is made under an ERISA bond it is made by the plan and it can be made only for losses due solely to theft and dishonesty. A bond does not in any way provide protection to internal fiduciaries for their acts (or failure to act) in their capacities as plan fiduciaries.
Source: Fiduciaryplangovernance.com, November 2013
Short video deals with the differences between fidelity bonding and fiduciary liability insurance. Did you know that they are two entirely different concepts? Well, they are. Watch this ERISA Sunscreen video post to learn the key differences.
Source: WithumSmith+Brown, September 2013
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