What you need to know to understand the ERISA fidelity bond.
In the Form 5500, one crucial detail to include is the amount of ERISA Fidelity Bond. ERISA fidelity bonds serve as insurance aimed at safeguarding employee benefit plans from losses stemming from fraudulent or dishonest actions, such as theft, embezzlement, or misappropriation of funds by those managing plan assets. These bonds provide financial coverage to compensate the plan in case of such occurrences.
As per ERISA regulations, bonding is mandatory for anyone handling plan funds or property, including trustees, administrators, employees, and individuals exercising discretionary control over plan assets. The bond amount must be at least 10% of the funds handled, with a minimum requirement of $1,000 per plan.
However, certain entities are exempt from ERISA bonding requirements, including government pensions, plans established by religious organizations like churches, plans solely covering applicable disability or workers’ compensation laws, and plans primarily maintained outside the United States.
Obtaining ERISA fidelity bonds is possible through authorized insurance companies or surety bond providers. Interested parties can explore options from various insurers or seek guidance from insurance brokers specializing in ERISA fidelity bonds. Additionally, the U.S. Department of the Treasury offers information and resources on surety bonds, including ERISA fidelity bonds, through its website at fiscal.treasury.gov/surety-bonds.
