ERISA Fidelity Bonds | Employee Benefit Plan Bonds

An ERISA fidelity bond is a type of insurance required under the Employee Retirement Income Security Act (ERISA) that protects employee benefit plans from losses due to fraud or dishonesty by plan officials who handle plan funds or property. It covers acts like theft, embezzlement, forgery, and other fraudulent conduct by plan fiduciaries, trustees, administrators, and employees who handle plan assets.

Federal law requires ERISA fidelity bonds for anyone who handles funds or property of an employee benefit plan, including 401(k) plans, pension plans, health and welfare plans, and profit-sharing plans. This includes plan trustees, administrators, officers, and employees who have physical contact with plan funds or the power to transfer or negotiate plan assets.

ERISA requires bond coverage of at least 10% of the amount of funds handled during the preceding reporting year, with a minimum of $1,000 and a maximum of $500,000 per plan official. For plans holding employer securities, the maximum increases to $1,000,000. The Department of Labor enforces these requirements, and plans must review and adjust coverage annually based on funds handled.

ERISA fidelity bond costs typically range from $100 to $2,000 annually depending on the coverage amount. A $50,000 bond might cost $100-$200 per year, while a $500,000 bond might cost $500-$1,500 annually. Pricing is based on coverage amount, number of covered individuals, and loss history. Unlike surety bonds, ERISA bonds are insurance products with fixed premium rates regardless of credit scores. Use our ERISA bond calculator for a personalized estimate.

Plan fiduciaries who fail to maintain required ERISA fidelity bonds face personal liability for plan losses, potential civil penalties from the Department of Labor, and may be prohibited from serving as plan fiduciaries. The DOL can impose penalties up to $110,000 per violation. Plan auditors are required to report missing bonds on Form 5500, which can trigger DOL investigations. Maintaining proper bonding is both a legal requirement and a fiduciary duty.

No. An ERISA fidelity bond and fiduciary liability insurance serve different purposes. The ERISA fidelity bond is a federally mandated surety product that protects the plan against fraud and dishonesty by plan officials. Fiduciary liability insurance is a voluntary policy that protects plan fiduciaries from personal liability for breaches of fiduciary duty such as imprudent investment decisions. Most plan sponsors should carry both, but only the fidelity bond is required by federal law.