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ERISA Surety Bond Guide
SuretyBonds.com is legally licensed to issue ERISA surety bonds in all 50 states. Whether you work in New York, Nevada, Georgia or Illinois, we can get you bonded!
What is an ERISA Bond?
An ERISA bond, or an Employee Retirement Income Security Act bond, is a type of insurance that is used to protect people who participate in employee benefit plans, such as a defined benefit plan, a pension fund, or a 401(k) plan. These bonds are required for employees who have administrative access to the retirement fund. Fiduciary liability insurance is different than an ERISA fidelity bond. According to the Department of Labor, the ERISA bond covers the plan, while fiduciary liability insurance covers the fiduciary.
How much does an ERISA bond cost?
ERISA bonds can be issued in coverage amounts ranging from $10,000 to $5,000,000. California, however, has its own rates. Note that ERISA bonds offer bond coverage up to $5 million, but amounts in the $500,001 to $5,000,000 range are subject to underwriting. ERISA bond amounts ranging from $10,000 to $500,000, however, are instant purchase. No matter what amount of bond coverage you need, the process can be done completely online through SuretyBonds.com.
The cost of an ERISA Bond is a small percentage of the total bond amount. To find out exactly what you will pay for your ERISA bond, select the amount of coverage you need from the drop-down at the top of the page.
How to apply for an ERISA bond
Applicants with a criminal history will not be approved for ERISA bonding as they cannot be legally hired to oversee retirement plan funds, such as pensions.
To apply for an ERISA bond, call a SuretyBonds.com surety expert at 1 (800) 308-4358 from 7 AM to 7 PM CST, Monday through Friday. Make sure to have the following information ready to begin the bonding process:
- Business name (Note: This is also known as the plan sponsor.)
- Name of the plan (Note: This is the actual name of the 401(k) pension.)
- Financial documentation (Note: This is needed for applicants pursuing bond coverage in amounts of $500,001 or more.)
Things to consider when applying for an ERISA bond
Bonds must be obtained from a surety that is named on the Department of the Treasury’s Listing of Approved Sureties.
Every fiduciary of an employee benefit plan, as well as every person who handles the funds of such a plan, needs to be bonded in an amount equal to 10% of the funds handled. However, when the plan includes non-qualifying assets, the bond amount is either 10% of plan assets being handled or the value of the non-qualifying assets, whichever is greater.
- Qualifying assets include items held by a financial institution such as a bank, insurance company, mutual funds, etc.
- Non-qualifying assets are those not held by any financial institution, including tangibles such as artwork, collectibles, and real estate.
If one obtains a plan that has more than 5% in non-qualifying assets and wants to receive a bigger bond, there are two steps to follow:
- Choose a bond that has a value that is equal to the non-qualifying asset.
- Have your bond audited once a year by a certified public accountant.
Note: A fiduciary’s bond amount must be reviewed and updated as a plan’s assets increase or decrease. If your plan’s assets have recently changed in value, give us a call at 1 (800) 308-4358 to determine whether your coverage also needs to change.
ERISA surety bonds are not required for SEC-registered brokers and dealers subject to fidelity bond mandates from their own regulatory agency or organization.
How long does it take to get an ERISA bond?
SuretyBonds.com typically issues ERISA surety bonds on the same day the bond is purchased, meaning you can receive your bond via email in just a few hours — no shipping required!
If you need more than $500,000 of coverage, you’ll have to provide a bit more information that will be subject to an underwriter’s review. Let our experts help you navigate the process!