Every fiduciary responsible for managing a pension, profit sharing or thrift plan and every individual/entity who handles the assets of such plan is required to obtain ERISA and/or In-House Pension Plan ERISA bonds under section 412(a) of the federal Employee Retirement Income Security Act of 1974 (ERISA) in order to protect that plan’s assets from fraudulent activity. The amount of the bond is fixed at the beginning of each fiscal year of the plan. It must be at least $1,000.00 and never less than 10% of the amount of the funds handled by the fiduciary up to a maximum of $500,000.00 per plan.

For plan years beginning after December 31, 2007, $1,000,000 is substituted for $500,000 if the plan holds "employer securities." The amount of the bond must be set as of the beginning of the fiscal year for the employee benefit plan; thus, if a plan first acquires employer securities mid-year, coverage will not need to be increased until the beginning of the next plan fiscal year.

• A fiduciary is defined to mean any person to the extent such person exercises any discretionary power or control over management of the plan or management and disposition of the funds or other property of any employee benefit fund; provides investment advice for a fee; or has discretion with regard to plan administration.
• ERISA Bonds fall into two categories. One type of ERISA Bond covers fiduciaries for claims involving client employee benefit plans. A second type, In-House ERISA Bonds, responds to claims involving the insured’s own employee benefit plans.
• An ERISA Bond is an amended FIDELITY BOND that meets the requirements of ERISA law. Both bonds respond to claims involving the dishonest acts of employees but there is one important difference: the loss payee. Under the ERISA Bond, any loss would be paid directly to the client whose assets are managed while under the FIDELITY BOND any loss would be paid to the insured.

Click here to download an Investment Advisors ERISA Bond Application (covers fiduciaries for claims involving client employee benefit plans).

Click here to download the Bonding Requirements for ERISA Advisors.

Click here to read Frequently Asked Questions from Investment Advisors about ERISA Bonds.

Click here to download the U.S. Department of Labor Field Assistance Bulletin No. 2008-04