What does ERISA bond cover?
An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty. Fraud or dishonesty includes, but is not limited to, larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, willful misapplication, and other acts.
Who is exempt from ERISA bond?
The following plans are exempt from ERISA’s fidelity bond requirement: Church plans and government plans. Plans that are completely unfunded (that is, benefits are paid from an employer’s general assets) Section 125 cafeteria plans.
What is the difference between a fidelity bond and an ERISA bond?
An ERISA bond covers employees who manage or have fiduciary responsibility for the company’s retirement fund. A fidelity bond covers employees who may not be able to receive a bond due to concerns with their personal background or employment history.
How much does my ERISA bond need to be?
10%
Generally, a bond must be for at least 10% of the amount of funds handled by the covered person in the preceding plan year but not less than $1,000. The maximum required bond generally is $500,000, but for plans like yours that hold employer securities, the maximum is $1 million.
Who pays ERISA?
employer/sponsor
Expenses relating to the decisions regarding the establishment, design, and termination of plans, except in the context of multiemployer plans, generally are not fiduciary activities governed by ERISA, and, therefore, should be paid by the employer/sponsor.
Is an ERISA bond a crime policy?
Employee Retirement Income Security Act (ERISA) bond coverage is often added to a crime policy subject to a zero retention in order to comply with ERISA bonding requirements.
What is the penalty for not having an ERISA bond?
There are no specific penalties. However, there are substantial risks associated with not meeting ERISA’s bonding requirements, including: Failing to report a sufficient bond on the Form 5500 can trigger a plan audit. It’s unlawful under ERISA for plan officials not to be bonded.
Who needs ERISA bond?
Required by ERISA Under ERISA section 412, “Every fiduciary of an employee benefit plan and every person who handles funds or other property of such a plan shall be bonded.” ERISA requires that fiduciaries carry bond coverage valued at: At least 10 percent of the plan assets that are handled, and.
Is ERISA bond required for Simple IRA?
While the DOL offers exemptions from the ERISA fidelity bonding requirement to qualified financial institutions that hold SEP and SIMPLE IRA assets, the agency requires employers who sponsor SEP or SIMPLE IRA plans and other plan fiduciaries who handle plan assets to be covered by an ERISA fidelity bond to prevent …
What does ERISA have to do with health insurance?
Most private sector health plans are covered by the Employee Retirement Income Security Act (ERISA). Among other things, ERISA provides protections for participants and beneficiaries in employee benefit plans (participant rights), including providing access to plan information.