When an organization has an ERISA based benefit plan, such as a 401K it must have an ERISA Bond. This coverage is needed to protect a portion of the retirement plan’s assets.
In this post, we describe what an ERISA Bond is and how it integrates with other important coverages relative to retirement plans.
An ERISA Bond is a form of fidelity insurance and simply put, fidelity insures against theft or embezzlement.
ERISA which is a federal law stands for the Employee Retirement Security Act of 1974. It was created to safeguard the assets held in a pension plan, a 401K plan or other qualified ERISA plans since these assets are held for the benefit of the organization’s employees and their beneficiaries.
The Department of Labor oversees ERISA and compliance with its laws. DOL wants to make sure that if assets are stolen from a retirement plan that there is an insured method to recover those assets and that is the job of the ERISA Bond.
Under ERISA, plan sponsors must insure 10% of plan assets up to a maximum of $5,000,000 in assets or a $500,000 bond.
Premiums for ERISA Bonds are pretty cheap and this coverage can often be combined with other forms of crime insurance when you purchase a stand-alone crime policy.
This video gives additional details on what you need to know when it comes to your retirement plan and safeguarding assets.
Have other questions or concerns relative to your ERISA-based retirement plan risk? Why not give me a call, or click the button below to set up some time with me.