The Employee Retirement Income Security Act of 1974 (ERISA) requires that every person who handles or controls plan funds shall be bonded to provide protection to the plan against loss by reason of acts of fraud or dishonesty. ERISA regulations require that all pension plans, including 401(k) plans, be insured by an “ERISA bond”.
Every fiduciary of a plan and anyone else (plan official) who handles or has authority to handle plan assets must be bonded. The bond must provide a direct right of access in favor of the plan in the event the insured plan official takes plan assets. The bond coverage amount must be at least 10 percent of plan as assets up to a maximum bond amount of $500,000. It is unlawful for, anyone who is required to be bonded to handle plan assets without a bond. Likewise, it is unlawful for any fiduciary to allow another plan official to handle plan assets without being properly bonded.
The fidelity, ERISA and fiduciary bonds are not the same as Errors & Omissions coverage that is often included in company liability policies. ERISA bonds cover against losses due to a criminal act. The errors & omissions insurance provides employers and advisors with coverage against losses due to any actual or alleged negligent act or error committed while engaged in performing professional services.
You can come directly to QPSI to purchase the Bond, please give us a call. To read about what the ERISA Fidelity Bond covers and why it is required please click here for more information.