Being a fiduciary comes with many responsibilities, such as protecting your employee benefit plan with an ERISA fidelity bond. Here are some frequently asked questions surrounding ERISA fidelity bonds with information that every employer and plan sponsor should know.

What is an ERISA fidelity bond?

An ERISA fidelity bond is a special insurance policy that applies to health and retirement plans that fall under ERISA’s jurisdiction. With an ERISA bond, these plans are protected against losses that result from fraud or dishonesty. 

Who must be bonded?

Most retirement plans are required to obtain an ERISA fidelity bond. Plans that are exempt from ERISA’s rules and regulations are not required to obtain an ERISA fidelity bond. Examples of exempt plans include Solo 401(k)s and plans sponsored by churches and government entities.

Unless exempt, ERISA requires that every person that “handles funds or other property” of any employee benefit plan be covered by a fidelity bond. These individuals may include plan administrators, plan sponsors, and any individuals who have access to plan assets or decision-making authority that “can give rise to a risk of loss through fraud and dishonesty”.

It is unlawful for any individual to “receive, handle, disburse, or otherwise exercise custody or control of plan funds or property” without being bonded.

Is an ERISA fidelity bond expensive?

Most insurance companies charge between $100 to $300 per year for an ERISA fidelity bond.

Is an ERISA fidelity bond the same as fiduciary liability insurance?

No, it is not.

An ERISA fidelity bond insures a plan against losses that result from fraud or dishonesty by individuals who handle plan assets or property.

Fiduciary liability insurance insures fiduciaries (and sometimes plans) against losses that result from breaches of fiduciary responsibilities. It does not satisfy ERISA’s fidelity bonding requirement.

What happens if I am not bonded?

Form 5500 requires that you answer whether or not your plan is covered by an ERISA fidelity bond. Plan fiduciaries who fail to ensure that a plan is properly covered may be liable for any losses that result from fraud or dishonesty. 

Does SaveDay offer an ERISA bond?

No. You must obtain a bond from a surety or reinsurer that is listed on the Bureau of the Fiscal Service’s list of certified companies. We inquire about your plan’s ERISA fidelity bond coverage as it’s a required question on Form 5500, which we prepare for you.

Does SaveDay charge for Form 5500 filings to the IRS?

No.

Where can I find more information about an ERISA fidelity bond?

For more information regarding ERISA fidelity bonds, you may email us, or refer to EBSA’s publication surrounding fidelity bonds.

Photo by Paige Cody on Unsplash

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