Busy person and plan sponsor: one and the same, right? As a business owner, you’ve likely found that sponsoring a retirement plan for yourself and your employees, though critically important, can really add to your to do list. Take a moment to focus in on three tasks you might have let linger—or forgotten entirely.
- Obtain an ERISA Fidelity Bond
An ERISA Fidelity bond is required by the U.S. Department of Labor to protect the assets of the retirement plan from theft. Syed Nishat, a partner at Wall Street Alliance Group, advises that without an ERISA bond:
A plan may have a higher audit risk and plan fiduciaries will be personally liable for losses that otherwise would have been covered by the bond. However, as this insurance doesn’t have a high cost, it is a large benefit with a small price for plan sponsors to have a sufficient amount bonded.
The good news for busy plan sponsors is that you can easily and quickly obtain your ERISA Bond from a national leader, Colonial Surety Company. In fact, Colonial offers a convenient package specifically for plan sponsors. Along with your ERISA Bond, you can affordably obtain fiduciary liability coverage. Importantly, this protects you—and your assets— from personal liability in the event of an alleged fiduciary breach. Why go it alone? With Colonial’s package, the annual premium is less that what you would pay for even one hour with an expert ERISA lawyer.
- File Form 5500
This is another essential that experts find can get overlooked by plan sponsors, especially those new to the duty. As advised in 401k Specialist:
Most 401k plan sponsors are required to file Form 5500, which is the Annual Return/ Report of Employee Benefit Plan. Small businesses in which the employees are only owners/ partners and their spouses are allowed to file the Form 5500-EZ for any year in which plan assets exceed $250,000. To correct having not made this filing, it’s best to reply to the IRS query with the filing and an explanation.
Review the Plan Fees
Lawsuits related to 401k plans seem to be everywhere these days—and not just those big ones that make the news. For example, in a recent year, there were over 12,000 ERISA lawsuits filed in U.S. District Courts.
Plan sponsors should review the details of a plan every few years to make sure that fees are reasonable and as low as possible for participants, utilizing the expertise of fiduciary financial advisors to balance the expense ratio of the plan’s mutual funds, the fees relating to the assets, and advisors’ fees.
Keep in mind, any individual involved in the management of a retirement plan can face personal exposure for breach of fiduciary duty. Imagine how even allegations of a fiduciary breach would divert attention and resources from your work—and life?
Avoid this possibility, and a lot of other stress too, with Colonial’s unique coverage package for plan sponsors. Colonial’s 2 or 3-year ERISA bond packages provide the greatest overall savings and protection. In addition to fiduciary liability coverage, you can even add cyber liability protection.
Remember: the required ERISA bond protects the assets of the retirement plan from theft; Fiduciary Liability coverage protects you and your assets from personal liability; and, Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
With Colonial, you can easily and quickly secure this comprehensive coverage package today: Complete and Affordable ERISA Bond Package.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.