Bond Amount
10% of the Plan’s Qualified Assets
Requiring Entity
ERISA
Underwriting Criteria
Instant Issue with No Credit Check Required
Who is Required to Secure this Bond
Under the Employee Retirement Income Security Act of 1974, all employee benefit plans must have a fidelity bond in place to cover the fiduciary (those responsible for managing the benefit plan) and any person who handles funds or other property of the plan (U.S. Department of Labor). Under ERISA, a “fiduciary” is defined as any person who (i) exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of assets, (ii) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) has any discretionary authority or discretionary responsibility in the administration of such plan (ERISA, Sec. 412, U.S. Code 1002(21)(A)). The act does not require employers to establish plans, but does set minimum standards for employers with benefit plans.
Bond Requirement Specifics
The bond is required to protect the beneficiaries of the plan from loss by fraudulent or dishonest act perpetrated by the plan’s administrator, officer or employee (U.S. Department of Labor). The bond is required to guarantee that all administrators, officers and employee manage funds in a manner that does not cause loss to the beneficiaries of the pension or benefit plan.
Who is protected Under this Bond
An ERISA bond protects all beneficiaries of the pension or benefit plan who are subject to a loss caused by the plan’s administrator, officer or employee. Should the beneficiaries of the bond suffer a loss, they have the right to make a claim on the bond to recover the loss
Underwriting Process
All ERISA bonds under the $500,000 amount are INSTANT ISSUE and only require that the applicant complete the ERISA application, which requires the plan name and address. The bond will be issued and mailed to the client the same business day that the application and payment are received. For all bonds exceeding the $500,000 amount, a separate application must be completed and submitted for approval. Bonds of this amount go through a similar approval process; however they cannot be issued instantly. A response as to approval and rate will be provided within one business day after an application is received.
What you Need to do Once you have your Bond
Once an ERISA bond has been received, it must be maintained by the client to comply with ERISA requirements. The bond can be maintained by the client or the plan administrator; however it does not have to be submitted to any entity. The bond must remain effective at all times to comply with ERISA requirements. Should the assets in the plan increase the amount covered by the original bond amount, all bonds are issued with a rider that protects the plan for any necessary increases. The plan will be protected up to the $500,000 limit and will not have to be increased until the current effective period of the bond expires. This feature protects the plan and its beneficiaries in the event that the assets in the plan increase.
* Please be advised that the quote you obtain for this bond may include a fee charged and retained by The Bond Exchange.