People who handle plan money face federal limits and bonding rules.
ERISA bars people with certain convictions from serving in plan roles and requires bonding for those who handle plan funds. Employers who give employees plan responsibilities should screen with these rules in mind.
What the rule says.
This summary is educational and not legal advice. ERISA bonding and screening requirements may be amended, so check current sources.
Disqualifying Convictions
ERISA section 411 generally bars a person convicted of certain crimes from serving as a plan administrator, fiduciary, officer, employee or other specified role for a period, absent an exception.
Bonding Requirement
ERISA section 412 requires every fiduciary and person who handles plan funds to be bonded, generally for at least ten percent of funds handled, subject to a maximum and exemptions.
FCRA Still Applies
Screening a person for a plan role through a screening company still follows the FCRA steps.
How it plays out.
Identify who touches plan money or makes plan decisions: payroll staff who remit contributions, human resources staff who handle enrollment, and committee members.
Check the bond, confirm it covers the right people and amount. Fidelity bonding is a specific ERISA requirement.
Record why a screening result was or was not acted on, and revisit it if the person moves into a plan-handling role. Take this as general information and ask counsel how bonding rules apply to your plan.
Where this shows up in your plan.
Plan Administrator Role
Know who is named as plan administrator and fiduciary and confirm they are eligible.
Participant Contributions
Employee contributions become plan assets quickly, so those who handle them must be vetted.
Audit Readiness
The plan’s annual filing asks about bonding, so keep records ready.
Setting it up.
List everyone who handles plan funds or has fiduciary authority.
Run permissible background screening using the FCRA process.
Confirm the ERISA bond amount and covered individuals.
Record fiduciary appointments in writing.
Review when staff or roles change.
Mistakes to avoid.
Do not skip screening for roles that handle contributions.
Do not confuse the ERISA bond with other business coverage.
Do not assume small plans are exempt from fiduciary duties.
Do not let an unscreened person approve plan payments.
Other rules employers work with.
Summary Plan Descriptions
Naming the administrator and fiduciaries.
DOL Wage and Hour and Plan Audits
What audits look at.
Main Background Screening Guide
The parent guide that explains screening before this fiduciary-specific page.
Laws and Rules Referenced
ERISA section 411, 29 U.S.C. 1111 — Prohibition against certain persons holding certain positions.
ERISA section 412, 29 U.S.C. 1112 — Bonding requirements.
FCRA employment-purpose provision, 15 U.S.C. 1681b — The footing for ordering a report on a person who will handle plan money.
Quick answers.
Questions about screening people who handle plan assets or fiduciary duties, with the detailed guide behind each.
Who must be bonded under ERISA?
Generally every fiduciary and person who handles plan funds, with exemptions.
Can someone with a conviction handle plan money?
Some convictions bar service for a period. Ask counsel.
Does the FCRA apply to these checks?
It does whenever a third-party screening company prepares the report.
More guides in this series.
FCRA Disclosure and Authorization Requirements for Michigan Employers
A companion guide in the same series.
FCRA Pre-Adverse Action Notices Before Rescinding a Job Offer
A companion guide in the same series.
FCRA Adverse Action Notice Content Requirements for Employers
A companion guide in the same series.
Conditional Offer Letters and Background Check Timing in Michigan
A companion guide in the same series.
Onboarding Notices and Benefit Enrollment Paperwork After Screening
A companion guide in the same series.
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