Does ERISA require a fidelity bond?
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Does ERISA require a fidelity bond?
One of ERISA’s requirements is that people who handle plan funds and other property must be covered by a fidelity bond to protect the plan from losses due to fraud or dishonesty.
Are fidelity bonds required?
Since 1974, employer sponsors of employee benefit plans such as 401(k) plans have been required by the Employee Retirement Income Security Act (ERISA) to maintain fidelity bonds.
How much does my ERISA bond need to be?
Generally, a bond must be for at least 10% of the amount of funds handled by the covered person in the preceding plan year but not less than $1,000. The maximum required bond generally is $500,000, but for plans like yours that hold employer securities, the maximum is $1 million.
How much does a fidelity bond need to be?
Typically, the bond needs to be at least 10% of the value of the plan assets. Regardless of the asset value, the bond must be at least $1,000 and need not be greater than $500,000. If a company has multiple retirement plans, one bond can cover all the plans.
How do I know if I need an ERISA bond?
If your responsibilities include any of the following, you probably need an ERISA bond: Negotiating or transferring retirement plan funds. Signing checks or other negotiable instruments of a retirement plan. Working with cash, physical documents, or other physical assets of a retirement plan.
Do all 401k plans require a fidelity bond?
2. Does my 401(k) plan require an ERISA fidelity bond? A fidelity bond is required as soon as you start your 401(k) plan. ERISA requires every person who handles funds or other property for an employee benefit plan, including 401(k) plans, to be bonded.
Is a fidelity bond and ERISA bond the same?
An ERISA bond covers employees who manage or have fiduciary responsibility for the company’s retirement fund. A fidelity bond covers employees who may not be able to receive a bond due to concerns with their personal background or employment history.
Who is exempt from a fidelity bond?
The following plans are exempt from ERISA’s fidelity bond requirement: Church plans and government plans. Plans that are completely unfunded (that is, benefits are paid from an employer’s general assets) Section 125 cafeteria plans.
What is the difference between a fidelity bond and an ERISA bond?
What does an ERISA fiduciary need to know about fidelity bond?
Required by ERISA The law specifically requires that this fidelity bond insures a plan against losses due to fraud or dishonesty – theft being the most obvious example – on the part of those who handle plan funds or other property of an employee plan.
What happens if a 401k plan does not have a fidelity bond?
The DOL (Department of Labor) is monitoring plans that report no fidelity bond coverage. If you do not have a bond, or the bond you have does not have sufficient coverage for the plan’s assets, you are at risk for triggering a DOL audit.
What is ERISA fidelity bond?
ERISA fidelity bonds protect employee benefit plans, participants and beneficiaries against losses due to acts of fraud or dishonesty. They are required by the Employee Retirement Income Security Act (ERISA) of 1974.
