Fidelity Bond Requirements
Plan officials include:
- Plan administrator
- Officers and employees of the plan sponsor who handle plan funds by means of receiving, safekeeping, and disbursement
- Certain third party service providers whose responsibilities allow access to plan funds or who have the ability to make certain decisions that could create loss through fraud
- Banks, insurance companies, and registered brokered dealers are deemed to be plan officials but are subject to certain bonding exemptions under the Department of Labor (29 C.F.R. §2580.412-6)
Important considerations:
- Minimum amount $1,000
- Maximum required $500,000 ($1,000,000 for plans which hold certain employer securities)
- The plan, not the plan sponsor, must be named the insured on the bond
- Surety of the bond must be an authorized provider which has been approved by the Department of the Treasury
- Not ALL fiduciaries are required to be bonded, only those who handle funds as described above
- The Secretary of Labor can impose special bonding requirements specific to a certain plan
- Fidelity bonds can be purchased from plan assets
- Certain exemptions exist
More information related to fidelity bonding requirements can be found in a Q & A published by the IRS, which can be found at the following web address https://www.dol.gov/ebsa/regs/fab2008-4.html.
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If you need more information regarding this or any other topic affecting your retirement plan, visit our Withum ERISA Knowledge Corner online, follow us on Twitter at WSB_ERISA or contact us at [email protected] to arrange a free consultation today.
The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your plan’s individual facts and circumstances.
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