The Importance of ERISA Bonds



The words “fiduciary breach,” conjure something big going wrong with the company-sponsored retirement plan, resulting in headline-making allegations. In reality, a painful, “regular,” plan sponsor error, failure to have the ERISA fidelity bond as required by The Department of Labor, is much more likely to wreak havoc for business owners.


ERISA Bonds: The Facts

The Department of Labor (DOL) requires retirement plan sponsors to obtain–and maintain–an ERISA Fidelity Bond. Essentially, ERISA bonds protect employer sponsored retirement plans from acts of fraud and dishonesty.  Failure to comply is a fiduciary breach–and very risky:


You are required to report that you have a fidelity bond on your annual Form 5500 filing. The Department of Labor (DOL) regularly monitors plans that report no fidelity bond coverage—and if you do not have a bond, or the bond you have does not have sufficient coverage for the plan’s assets, you are at risk for triggering a DOL audit. Failure to have a bond is a fiduciary breach, resulting in plan fiduciaries being  personally liable for any losses due to fraud or dishonest practices that would have been covered by the fidelity bond.


Section 412 of the ERISA Act of 1974 specifies: “Every fiduciary of an employee benefit plan and every person who handles funds or other property of such a plan…shall be bonded as provided in this section…”. To ensure compliance, plan sponsors should take note of these three points



  • For new plans, a fidelity bond should be in place by the time the plan is set up. Estimated plan contributions are used to determine the exact bond amount, but employers can plan on it being at least $1,000 in coverage.
  • At the beginning of each plan year, the coverage amount of the bond must be at least 10 percent of the amount of funds handled. The minimum bond amount is $1,000 and, in most cases, is not required to be more than $500,000. However, the plan can purchase a bond for a higher coverage amount, if appropriate.
  • Fidelity bonds are obtained through a surety or reinsurer that is named on the Department of Treasury’s (DOT) Listing of Approved Sureties.


Help With ERISA Bond Compliance?

As a Treasury-listed –and leading–national provider of ERISA bonds, Colonial Surety Company helps retirement plan sponsors and other fiduciaries quickly and easily obtain their required ERISA bonds, and uniquely offers these additional services to ensure ongoing compliance and protection:



  • Retroactive coverage for gaps in your ERISA bond compliance
  • Multi-year options to ensure continuous coverage at locked in rates
  • Affordable, add-on liability coverage (Fiduciary+Cyber) to shield personal and business assets from allegations of breaches under the high standards of ERISA law. 



Obtain or renew your ERISA bond in minutes now. If you have had an ERISA Bond and need to update it, just log in and make your choices. If you are new to Colonial Surety, obtain your quote, enter payment and download your proof of coverage–instantly. 


Learn more about ERISA Bonds from our experts and ensure compliance today: 

ERISA Fidelity Bonds Made Easy


Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.