The Employee Retirement Income Security Act (ERISA) requires that people who handle plan funds must be covered by a fidelity bond to protect the plan from losses due to fraud or dishonesty. The fidelity bond must be obtained from an insurance company, listing the plan itself as the insured. Also, the bond can be added as a rider to your company’s liability insurance policy, naming the plan separately, or as a separate bond policy based upon the advice of your insurance agent.

Fidelity bonding should cover all employees of the employer who handle plan funds or other property by virtue of their job duties. Please note this coverage should not be limited to trustees of the retirement plan.

The bond coverage should equal 10% of plan assets. As an example, if the retirement plan assets are valued at $1,000,000, the bond should be $100,000 at a minimum. However, the maximum bond amount required is $500,000 regardless of the asset amount of the retirement plan.

The Department of Labor (DOL) gathers this information on your annual Form 5500 by asking the question:

“Was the plan covered by a fidelity bond?”
Yes No N/A Dollar Amount of Bond______________

Benefits Administrators requests this information annually from each of our clients so that we provide the updated information to the DOL on your behalf. If you have any questions regarding the fidelity bonding requirement, please contact your Retirement Plan Coordinator.