Four Important Facts About ERISA Fidelity Bonds


Employee benefit and retirement plans make companies and business that offer them fantastic places to work. Yet mistakes or dishonesty can happen to even the best companies, which can put those benefits at risk. That’s where The Employee Retirement Income Security Act (ERISA) of 1974 comes into play. Thanks to ERISA fidelity bonds, employees and employers alike can ensure those benefits remain available no matter what happens. To clear up any confusion about them, here are four facts about what an ERISA fidelity bond is and isn’t.

  • ERISA fidelity bonds are required by law

Under section 412 and 29 C.F.R. Part 2580, ERISA bonds are required by law to protect employee benefit plans from theft or dishonesty. There are a few exemptions, which can include unfunded plans, banks, and insurance companies conducting business under authority and supervision of state or federal laws and examinations. Fortunately, such bonds are often inexpensive.

Plan officials, or the fiduciaries of the employee benefit plans, must be bonded for at least 10% of the amount of funds they handle. As of January 1, 2008, the maximum required bond amount is $1,000,000 for plan officials of plans that hold employer securities.

ERISA fidelity bonds protects the employee benefit plans from dishonesty, but it does not protect the employers from legal action should such events occur. That is the role of fiduciary liability insurance to protect the personal assets of the fiduciary to penalties or from being seized by the court. This insurance covers errors, omissions, and breaches of duty, but not dishonesty or theft. Fiduciary liability insurance is also not required, and can be a bit expensive depending on the plan covered. But it is a very good idea and includes cyber liability insurance at no additional cost.

  • ERISA fidelity bonds don’t come from just any insurer

This is where Colonial Surety comes in. We can offer ERISA fidelity bonds covering all ERISA regulated pension plans, all approved and endorsed by the US Department of Labor. Protect the retirement plans and benefits of your company today with help from Colonial Surety – our expert team is ready and willing to answer any questions you may have.