The Employee Retirement Income Security Act (ERISA) is a federal law that aims to regulate employee retirement and health plans. A Qualified ERISA Bond is a surety bond that all plan officials of employee benefits plans must have as required by the U.S. Department of Labor. The Qualified ERISA Bond is also commonly referred to as an ERISA Dishonesty Bond or ERISA Fidelity Bond.
This specific bond only covers qualified assets, which are assets held by a financial institution. If you have a plan with non-qualifying assets, contact our surety experts at info@ezsuretybonds.com for more information.
ERISA bonds protect individuals that participate in employee benefits plans, such as 401(k) plans, pension funds, deferred-compensation plans, and profit-sharing plans. If a fiduciary commits a dishonest or fraudulent act that harms a party to the plan, the injured party can make a claim on the bond to recover damages. Fraudulent and dishonest acts include theft, embezzlement, accepting duties that cause a conflict of interest, misusing funds, forging documents, and more.
Every plan official that interacts with the funds of an employee benefits plan or performs fiduciary duties for these plans must have an ERISA Dishonesty Bond. There are some exemptions, however. The Employee Retirement Income Security Act does not cover Federal, state, and local government plans (in addition to some church plans). Which means those plans do not have a bond requirement.
Qualified ERISA Bonds are typically issued for three-year terms. Your bond amount will be 10% of the total assets of the employee benefits plan. For example, if the total assets of a 401K were $250,000, the bond amount for that plan would be $25,000. For plans with total assets of 5 million dollars or less, you can purchase your bond instantly through our website.
If your plan has more than 5 million dollars in qualified assets, your bond amount will be more than $500,000, and we’ll need more information to get you a quote. Bond amounts greater than $500,000 are underwritten, meaning the surety company will perform a soft credit check before quoting your bond.
If your bond amount is $500,000 or less, you can purchase your ERISA bond instantly through our website. See the chart below for our pricing:
Bond amounts greater than $500,000 will be underwritten. Having good credit will help you get a lower premium. However, if you have nonstandard credit, we have multiple sureties we will contact to try to find you a quote.
ERISA bonds are unique in that they account for the growth of employee benefits plans. We call this the inflation guard. The inflation guard allows for your plan’s qualified assets to increase up to $5 million (equivalent to a $500,000 bond amount) and remain covered without increasing your current bond amount. Essentially, if your plan’s qualified assets increase and are less than $5 million, your current bond amount is sufficient until your bond renewal. When your bond comes up for renewal, we’ll reach out to you to confirm your plan’s assets and readjust the bond amount if necessary.
If your plan’s assets grow past $5 million, contact us at info@ezsuretybonds.com, and we’ll work with you to get the bond coverage you need.
Once you calculate your bond amount, which should be 10% of the total qualified assets of the employee benefits plan, you can apply for your Qualified ERISA bond on our site. Just fill out the short application and, if your bond amount is $500,000 or less, purchase your bond instantly for the price listed above. If you need a bond amount greater than $500,000, fill out the application, and someone will reach out to you with your quote within 24 hours.
If you still have questions, contact our surety experts at info@ezsuretybonds.com or call us at 1-866-546-4605.
How is an ERISA Bond different from fiduciary liability insurance?
ERISA Dishonesty Bonds protect the employee benefits plan itself from the dishonest or fraudulent acts committed by plan administrators or other fiduciary agents. Typically, fiduciary liability insurance protects the fiduciary themselves from losses that occur as a result of a breach in fiduciary duties. Fiduciary liability insurance is not required and is not a substitute for fulfilling the ERISA bonding requirement.
What is an ERISA Bond for?An ERISA bond is for plan officials of employee benefits plans that perform fiduciary duties such as:
An ERISA bond insures the employee benefits plan in cases where a fiduciary commits fraudulent or dishonest acts that harm a party to the plan.
I’ve purchased my ERISA Bond, now what?
ERISA bonds do not have a specific obligee, meaning you do not have to file your bond with anyone. Once you buy your bond, we mail the original bond to you. Make sure to keep the original bond for your records and renew it for every year the plan is active.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
