ERISA fidelity bond requirement: who needs one and who does not
ERISA requires a bond for people who handle plan money, but many employer health plans fall outside it. Knowing which side you are on avoids both a gap and an unneeded cost.
Six Parts of the Bond Question.
ERISA for Employer Health Plans
Start here for the statute that sets out fiduciary duties.
ERISA Compliance Checklist
A step-by-step list of recurring obligations for plan sponsors.
Fiduciary Governance Services
Naming the people who make decisions about the plan.
DOL Health Plan Audit Toolkit
The records an auditor from the Department of Labor will want to see.
Summary Plan Description Guide
Where plan duties are described.
Cafeteria Plans for Employers
A plan type that raises funding questions.
Checking your plan against the bond rule.
The bond rule turns on how the plan is funded and who handles money. Plans that are funded and paid entirely through an insurance carrier, or paid from the employer’s general assets, are often treated differently from plans that hold participant money in a trust. Because the answer depends on those facts, the first step is to document how your plan is funded.
If a bond is needed, someone must buy it, keep it in force and make sure the amount stays right as plan assets grow. If it is not, record the reason in your compliance file. In both cases, confirm your position with your advisor or counsel instead of relying on a general rule.
Questions About ERISA Bonds.
Straight answers for HR leaders, finance staff and anyone handling a transaction.
What Is an ERISA Bond?
A bond that protects a plan from loss caused by fraud or dishonesty by people who handle plan funds.
How Much Is Required?
Generally at least 10 percent of the funds handled, within a minimum and maximum set by the statute.
Do Health Plans Need One?
Plans paid entirely from the employer’s general assets are generally not required to carry one, but plans holding participant money in trust may.
Is It the Same as Fiduciary Insurance?
No. A bond covers dishonesty by handlers of plan funds, while fiduciary coverage protects against claims of fiduciary breach.
Can a Small Employer Use This?
Frequently, although requirements and pricing vary with the size of the group. Tell us about your setup and we will point out which rules matter.
Do the Rules Change Each Year?
Dollar limits and a few requirements are revised from year to year; our limits and compliance update pages carry the current numbers.
Who Should We Involve?
Legal questions go to your attorney or tax professional, budget questions to finance, and plan design and vendor choices to a benefits advisor.
Can You Review What We Have Now?
Yes. Share the plan documents along with the renewal and we will lay out your current position and the alternatives open to you.
What Should We Send You First?
A copy of the current plan summary, the renewal notice, and whichever policies or vendor contracts are relevant.
How Do We Start?
Pass along the renewal and tell us when a decision is due. We will go through it and walk you through the choices.
Who is covered by the bond?
Generally, people who handle plan funds. Who counts depends on the plan’s structure, so confirm with your advisor or counsel.
Is an ERISA bond the same as fiduciary liability insurance?
No. They protect against different things, and having one does not replace the other. Ask your advisor how each applies to your plan.
Ready? Upload your renewal, or speak with someone first. There is no fee and no commitment.
This overview of ERISA bonding is educational only and is not legal or tax advice. Questions about your specific plan should go to your attorney and tax professional, and we are glad to work alongside them.
The Law Behind This Topic.
Each law mentioned above links to the statute or regulation behind it. Treat this as general information rather than legal advice; requirements shift, so read the current text and confirm with your attorney.
ERISA Bonding Requirement (29 U.S.C. 1112)
ERISA section 412, which requires bonding for people who handle plan funds, with set minimum and maximum amounts.
Definitions Under ERISA (29 U.S.C. 1002)
ERISA’s definitions of an employee welfare benefit plan and associated terms.
Related Compliance Reading.
Compliance
The main hub covering this subject.
Employer Benefits Guides
The full section.
Employer Benefits Compliance Updates
Developments worth keeping an eye on.
Selecting And Monitoring Health Plan Service Providers
How to select, monitor and document the vendors that run your group health plan, including the ERISA section 408(b)(2) fee disclosures.
Unsure If You Need One? Send Us Your Plan.
Once we see it, we will give you a view on whether the pricing is competitive, point out openings worth pursuing, and hand you five pointed questions for your carrier. There is no fee and no pressure to switch.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
We need four items, plus two more for groups of 50 or more. Anything beyond that only slows the process down.
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