What is an erisa bond?

An ERISA bond is a type of insurance bond that is required by the Employee Retirement Income Security Act (ERISA) of 1974. ERISA bonds serve as a form of protection for employee benefit plans against losses caused by dishonest acts or fraud committed by plan officials or fiduciaries.

ERISA bonds are typically purchased by plan sponsors or trustees and are required to be in place for plans that have more than $500,000 in assets. The bond must cover at least 10% of the total plan assets, up to a maximum of $500,000.

ERISA bonds help protect both the plan participants and the plan itself by ensuring that funds are properly managed and protected. In the event of a loss due to fraud or dishonesty, the bond would provide financial compensation to cover the losses.

It is important for plan sponsors and trustees to carefully consider the amount of coverage needed for their specific plan and ensure that they are in compliance with ERISA requirements. Failure to have an adequate ERISA bond in place can result in penalties and legal consequences.