Fidelity & Crime
ERISA Bond
An ERISA bond is the fidelity bond federal law requires to protect an employee benefit plan, such as a 401(k), from theft or fraud by the people who handle its money.
- Required by
- U.S. Department of Labor under ERISA section 412 (29 U.S.C. 1112)
- Bond amount
- At least 10% of plan funds handled, minimum $1,000, maximum $500,000 per plan ($1,000,000 for plans holding employer securities), set by ERISA section 412
What this bond guarantees
The bond protects the plan against losses from fraud or dishonesty by anyone who handles plan funds or property. The plan is the insured party. A claim arises when a plan official steals or misappropriates plan assets.
Who needs it
- Employers sponsoring 401(k), pension, or welfare plans
- Plan trustees and administrators who handle plan assets
- Service providers that handle plan funds
What the underwriter looks at
- Plan assets
- Number of plan officials covered
- Whether the plan holds employer stock
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
Can the plan pay for the bond?
Yes. Department of Labor guidance says a plan may pay for a proper ERISA bond from plan assets.
Is fiduciary liability insurance the same thing?
No. The ERISA bond covers theft and fraud and is required. Fiduciary liability insurance covers breaches of fiduciary duty and is optional.
Who can issue it?
The surety must be on the Treasury Department's list of approved sureties (Circular 570).