What is an ERISA Dishonesty Bond?
Protect Your Employee Benefit Plan from Fraud and Non-Compliance.
When managing an employee benefit plan, compliance with federal regulations is essential. One of the most important compliance requirements under the Employee Retirement Income Security Act (ERISA) is securing an ERISA bond, also known as an ERISA fidelity bond or ERISA dishonestly bond. This bond is designed to protect employee benefit plans from losses caused by acts of fraud or dishonesty committed by those who handle plan funds.
Why ERISA Bonds Are Required
The U.S. Department of Labor requires ERISA bonds to prevent misuse of plan funds. As a type of surety bond, it provides coverage in the event of theft, embezzlement, forgery, or other fraudulent acts involving retirement plans such as 401(k)s, pension plans, or profit-sharing plans.
Unlike other forms of insurance that protect the employer, ERISA bonds specifically safeguard plan participants and beneficiaries by ensuring that funds are not misappropriated. If a dishonest act occurs such as forgery, embezzlement, or theft, the bond reimburses the plan for its losses, up to the amount of coverage purchased.
Who Needs an ERISA Bond
Any individual who handles plan funds or property must be bonded under ERISA. This includes:
- plan administrators
- trustees
- employees with access to plan assets
The required bond amount must equal at least 10% of the funds handled, with a minimum of $1,000. Failing to secure proper bonding can lead to Department of Labor penalties and serious compliance issues.
Benefits of Having an ERISA Dishonesty Bond
Beyond meeting federal requirements, an ERISA dishonesty bond offers several key advantages that help protect both your organization and its plan participants, such as:
- Legal Compliance: ERISA bonds are a federal requirement. Without one, your plan may be out of compliance with the Department of Labor.
- Protection Against Fraud: Even trusted employees can commit dishonest acts. The bond provides financial security to plan participants if funds are stolen or misused.
- Peace of Mind: Knowing that your plan has this protection in place builds trust with employees and demonstrates responsible plan management.
How to Get an ERISA Dishonesty Bond
Obtaining an ERISA bond is a fast and simple process. Most bonds can be issued quickly once an application is completed, with affordable premiums based on the required coverage amount.
At TSIB, our easy 3-step online application makes it simple to secure your ERISA bond in just a few minutes.
Once approved, you’ll receive documentation to show compliance with Department of Labor requirements. Get your ERISA Dishonesty Bond today and protect what matters most—your employees’ trust and retirement funds.
TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
Texas: Austin, San Antonio, Houston, Dallas
California: Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County
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