Fidelity Bonds for Your Retirement Plan

Under the Department of Labor (DOL) regulations, your retirement plan will need to maintain an ERISA Fidelity Bond. A fidelity bond protects the assets in the plan from misuse or misappropriation by the plan fiduciaries. Plan fiduciaries include the plan trustees and any person who has control over the management of the plan and its assets.

Required ERISA Fidelity Bond Amount

At the very least, the bond must be equal to 10% of the value of the total plan assets, with a minimum bond value of $1,000 and a maximum bond value of $500,000. For the first year, the bond amount will be based on the estimated amount of assets that will be handled by the plan for the year.

If you have non-qualifying assets more than 5% of the total plan assets, additional requirements apply. Non-qualifying assets are those assets not readily tradable on a recognized exchange. These may include limited partnerships, artwork, collectibles, mortgages, real estate, securities of closely-held companies and other assets held outside of regulated institutions such as a bank; an insurance company; a registered broker-dealer or other organization authorized to act as custodian for retirement accounts. Non-qualifying assets require additional bond coverage equal to 100% of these assets or could subject a plan to obtain a full-scope audit, where an independent CPA physically confirms the existence of the assets at the start and end of each Plan Year.

Why do I need an Erisa Fidelity Bond?

There are serious consequences for not purchasing and maintaining a sufficient ERISA fidelity bond. Not having this required coverage can be a red flag to the Department of Labor that they need to take a closer look at the plan. You are not only at risk for a DOL audit, but there are citations associated with not having this required coverage.

How do I obtain an Erisa Fidelity Bond?

As a convenience to you, EJReynolds has partnered with Colonial Surety Company, a national online insurance company that is U.S. Treasury listed and licensed in all states and territories. As experts in all aspects of ERISA regulations, Colonial Surety Company will ensure that you are properly bonded and that your bond is renewed prior to expiration so that your plan remains in compliance.

You can easily obtain an ERISA Fidelity Bond for your plan at:

Or, contact EJReynold and we’ll connect you with one of our expert ERISA Bond partners.

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