ERISA Fidelity Bond Insurance

Unlike insurance, an ERISA Fidelity Bond responds to fraud and reimburses an employee benefit plan for lost funds. Companies that sponsor retirement plans accept specific fiduciary duties and bonds help them maintain that integrity.

Who is ERISA Fidelity Bond Insurance for?

Plenty of companies offer employee benefit plans, and consequently must follow strict rules established by ERISA. For example, businesses must maintain an ERISA fidelity bond of at least 10% of the plan’s assets. Unsurprisingly, failure to fulfill fiduciary duties could potentially result in massive financial loss. Besides, company leaders could be held personally responsible for noncompliance issues.

Employee benefit plan sponsors

Sponsoring an employee benefit plan is a game-changer — but it’s essential to protect that plan against losses caused by dishonesty or acts of fraud.

Retirement plan administrators

Individuals handling the everyday administration of employee benefits, such as a 401(k) plan must be covered by a fidelity bond.

Companies complying with ERISA

The Employee Retirement Income Security Act of 1974 (ERISA) has specific requirements for companies, including a fidelity bond of 10% of the plan’s assets.

Why you need ERISA Fidelity Bond Insurance


Summary

When companies sponsor an employee benefit plan, they accept a responsibility of protecting their employees’ retirement savings, also known as fiduciary responsibility. Bonds and insurance offer protection; however, bonds aren’t the same as insurance. Bonds tend to address low-frequency risk, while insurance covers expected losses. Unlike insurance, a bond contract involves three parties: you (the principal), the insurance company (the surety), and the plan (the obligee). If the principal fails, the surety pays out directly to the obligee.


Reasons for getting ERISA Fidelity Bond Insurance
Protects your employees’ retirement savings
Helps your company maintains ERISA compliance
Fulfills your fiduciary duties to employees
Protecting plan officials

Individuals handling employee’s money, such as transferring funds, face loads of risk. If something goes awry, the first person to blame is typically the plan official.

Big brother is watching

The government conducts an annual review, using Form 5500. In this form, a 401(k) plan reports the dollar amount of its fidelity bond to verify compliance.

Noncompliance is costly

Failing to meet ERISA’s bonding requirement can result in plan audits. Also, fiduciary’s personal assets are at risk when companies don’t comply with ERISA.

What Does ERISA Fidelity Bond Insurance Cover

You will have to consult your policy documents to confirm exactly what coverage your insurance provides but here are  some examples of what is covered by ERISA Fidelity Bond Insurance:

Bonds aren’t the same as insurance; however, ERISA fidelity bonds are types of insurance, protecting 401(k) plans from losses caused by acts of fraud or dishonesty, such as theft, forgery, or embezzlement by individuals handling the plan funds or property.


Thefts

Bonds protect retirement plans if a plan official steals funds, money, securities, premiums, credits, property or other assets for their own gain.


Fraud

Pension fraud comes in many forms, but essentially it’s misrepresenting a retirement fund either by 1.) providing the plan’s benefits, or 2.) stealing someone’s retirement benefits.


Embezzlement

The most common form of embezzlement is when employers withhold contributions to employee paychecks and use it for their own purposes.

ERISA Fidelity Bond Insurance Claim Examples

Here are some claim examples that illustrate what ERISA Fidelity Bond Insurance covers

A fiduciary holds the power to transfer funds and has disbursement authority. If an individual possessing this power moves unauthorized funds or other property from the plan and it results in financial loss, a lawsuit often follows.

ERISA Fidelity Bond Insurance FAQs

Yes. Some financial institutions, including specific banks, insurance companies, registered brokers and dealers are exempt — but they must meet the conditions of the exemption.

How it works

Finding insurance coverage doesn’t have to be painful. We aim to make the purchasing experience as streamlined & intuitive as possible.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

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