An ERISA fidelity bond is a special type of insurance required by federal law to protect retirement plan assets from theft or fraud.
Q. Is an ERISA fidelity bond required for all retirement plans?
A. Yes, most retirement plans subject to ERISA must have a fidelity bond if anyone handles plan funds or property.
Q. Who must be covered by the bond?
A. Any person who handles plan assets-this includes fiduciaries, administrators, and anyone with access to plan funds.
Q. What does the bond protect against?
A. It protects the plan and its participants, not the fiduciary, from losses due to fraud, theft, or misuse of plan assets.
Q. How much coverage is required?
A. The bond must be at least 10% of plan assets, with a minimum of $1,000 and a maximum of $500,000 (or $1,000,000 for plans holding employer securities).
Q. is this the same as fiduciary liability insurance?
A. No. A fidelity bond protects the plan, while fiduciary liability insurance protects the fiduciary from claims of mismanagement.
Q. Who pays for the bond?
A. The cost of the bond is typically paid by the employer, but in some cases the cost may be paid by the retirement plan.
