Protect Your Plan with a 
Fidelity Bond 

Fidelity bonds are a way to ensure protection for policyholders from fraudulent or dishonest actions by a plan trustees, or company employees who handle plan assets. With the creation of a retirement plan, fidelity bonds are required for plan officials who oversee the plan’s assets.

Fidelity bonds differ from regular bonds several ways. Unlike traditional bonds, fidelity bonds do not accumulate interest and are not tradable. Simply put, they are insurance to prevent loss from fraudulent acts. Examples include fraudulent trading, theft and forgery. Fidelity bonds can cover not only loss of monies but stolen or damaged property.  

An ERISA fidelity bond is required to protect the plan’s participants from acts of fraud and dishonesty by those individuals overseeing the plan. In general, the bond amount must be for 10 percent of the plan’s assets. The bond cannot be for less than $1,000, regardless of the value of the Plan’s assets. The maximum amount of bonding required, regardless of the Plan’s assets is typically $500,000. However, when a plan holds employer securities, the maximum amount required is increased to $1 million. Here are some other important things to know about ERISA Fidelity Bonds:

• ERISA fidelity bonds can cover multiple plans. For this to occur, the bond must cover the minimum required for each plan combined.
• Not having proper bonding is a breach in fiduciary responsibilities and may be penalized as such. Fiduciary breaches often carry heavy penalties.
• A retirement plan can purchase an ERISA fidelity bond. Using plan assets to purchase a bond does not violate ERISA’s fiduciary provisions.