An ERISA bond, also called a fidelity bond, protects workers' retirement money from theft. Federal law requires it for most people who handle a company retirement plan.
- Who needs it
- People who handle a company retirement plan
- Required coverage
- 10% of plan assets; $1,000 min, $500,000 max
- With company stock
- Maximum rises to $1,000,000
- What you pay
- From about $100 for $500,000 coverage
- A claim protects
- The retirement plan and its workers
What is an ERISA Bond?
An ERISA bond pays the retirement plan back if someone who handles the money steals it. ERISA is the federal law that protects retirement plans. The bond protects the plan and its workers, not the person handling the money.
It is a fidelity bond, which means it covers dishonest acts like theft and fraud by plan officials and staff.
Who needs an ERISA Bond?
Anyone who handles money or property in a 401(k) or similar plan needs to be bonded. This often means business owners, plan trustees, and certain employees.
Most small business owners who offer a retirement plan need this bond. It is a basic rule of running a plan.
How does an ERISA Bond work?
Here is how the coverage is set:
- The law says the bond must cover at least 10% of the plan's money.
- The minimum is $1,000 and the maximum is $500,000.
- The maximum rises to $1,000,000 if the plan holds company stock.
- You buy the bond from Junno Surety for a small fee.
- If a plan handler steals, the plan files a claim and the bond pays it back.
Review your plan's value each year so your bond amount stays high enough.
How much does an ERISA Bond cost?
ERISA bonds are cheap for the coverage you get. At Junno Surety, prices start at about $100 for $500,000 of coverage.
Larger coverage uses the industry rate minus 5%. For most small plans, this is one of the lowest-cost bonds you will buy.
What happens if someone files a claim?
A claim happens when someone who handles the plan steals money or commits fraud. The bond pays the plan back up to the coverage amount, and then the bond company goes after the person who stole.
How to get your ERISA Bond from Junno Surety
Junno Surety can set up your ERISA bond fast. Tell us your plan's value and whether it holds company stock, and we will quote you the right coverage the same day.
We are a licensed surety bond agency and can often issue your erisa bond the same day. Start your free quote → or call (762) 499-0237.
Things to know about an ERISA Bond
The ERISA bond is one of the easiest rules to follow once you know it. Check your plan's value, take 10% of it, and that is your minimum coverage, between the $1,000 floor and the $500,000 cap. If your plan holds company stock, the cap goes up to $1,000,000. Buy enough coverage and keep it active. The most common mistake is letting the coverage fall behind as the plan grows. So review the amount each year. The bond is cheap, so it is better to round up than to come up short. If an auditor ever checks your plan, having the right bond in place saves you a headache.
Frequently asked questions
Does the ERISA bond protect me or the plan?
It protects the retirement plan and its workers. It pays the plan back if a handler steals. It does not protect the person who handles the money.
How much coverage do I need?
At least 10% of plan assets, with a $1,000 minimum and a $500,000 maximum. The max is $1,000,000 if the plan holds company stock.
Is it expensive?
No. Coverage of $500,000 often starts around $100. It is one of the cheapest bonds for the protection it gives.
Is the ERISA bond the same as fiduciary insurance?
No. The ERISA bond is required by law and protects the plan from theft. Fiduciary liability insurance is optional and protects you if you are sued over plan decisions.
What if my plan grows during the year?
Review your coverage at least once a year. If 10% of your plan's assets rises above your bond amount, raise your coverage to stay compliant.