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.
The ERISA Fidelity Bond
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.
Is Your Employee Benefit Plan Adequately Covered by an ERISA Fidelity Bond?
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
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
ERISA Tips: What Is an ERISA Fidelity Bond?
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
Fiduciary Insurance and Fidelity Bond Coverage
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
Council Finds Noncompliance With ERISA Fidelity Bond Rules
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
Bonding Requirements for ERISA Plans
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
ERISA Bond: What Is It and Do I Need One?
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
What You Should Know About Your Plan's ERISA Fidelity Bond Coverage
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
Don't Forget the ERISA Bond
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
ERISA Bond: What Is It and Do I Need One?
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
Five Things People Get Wrong About ERISA Fidelity Bonds
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
ERISA Fidelity Bond vs. Fiduciary Liability Insurance
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
DOL's Initiative Regarding Fidelity Bonding
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
DOL on ERISA Fidelity Bonds
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
Don't Forget About Your ERISA Fidelity Bond
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
IRS What Plan Sponsors Need to Know About Bonding Requirements for ERISA Plans
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
Obtaining ERISA Fidelity Bonds
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
Avoiding a Scary Fidelity Bond
Video offers one best practice to take the "scare" out of your plan's fidelity bond.
Source: Erisasunscreen.com, November 2014
ERISA Fidelity Bond and Fiduciary Liability Insurance: What's Required and What's Prudent?
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
Fiduciary Liability Insurance -- Am I protected
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
Why ERISA Bonding is Nice but Not Enough
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
Video: Fidelity Bonding vs. Fiduciary Liability Insurance
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
401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
| Contact Us