An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty. Fraud or dishonesty includes, but is not limited to, larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, willful misapplication, and other acts.
Thereof, how much does a fidelity bond for 401k cost?
Fidelity bonds are affordable and easily purchased
“Blanket” bonds – which cover all your employees – are available for as little as $100 per year. Further, many surety companies make it possible to purchase new bonds or renewals online in minutes.
Keeping this in consideration, do I have to have a fidelity bond for my 401k?
A fidelity bond is required as soon as you start your 401(k) plan. ERISA requires every person who handles funds or other property for an employee benefit plan, including 401(k) plans, to be bonded.
Who needs a fidelity bond?
It is used by businesses to cover losses due to the actions of a dishonest fiduciary employee. Fidelity bonds are used to protect the assets in the company retirement plan due to fraud by a fiduciary that has access to plan assets such as; cash, checks, and property.
What is the difference between an ERISA bond and a fidelity bond?
An ERISA bond covers employees who manage or have fiduciary responsibility for the company’s retirement fund. A fidelity bond covers employees who may not be able to receive a bond due to concerns with their personal background or employment history.
How much does a million dollar insurance bond cost?
Surety bonds are paid in premiums. For commercial bonds (i.e. license bonds), the premiums are normally between 1% and 5% of the bond amount. That means that a one million dollar bond, quoted at 1%, will cost $10,000.
Do cash balance plans need a fidelity bond?
A fidelity bond insures the retirement plan against losses due to fraud or theft by people who handle the plan’s funds or property. … And while many plan fiduciaries may have fiduciary liability coverage, ERISA doesn’t require it and it doesn’t satisfy the fidelity bonding requirement.
What happens if you don’t have ERISA bonds?
Q: What happens if there’s no ERISA bond coverage for the plan? A: If there’s a loss as a result of fraud, dishonesty, theft, or some other criminal act, then the fiduciaries will have to pay out-of-pocket for the losses. In other words, they will become personally liable for the losses.
What type of insurance is fidelity bond?
A fidelity bond is a form of business insurance that offers an employer protection against losses that are caused by its employees’ fraudulent or dishonest actions. This form of insurance can protect against monetary or physical losses.
Why is a fidelity bond required?
An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty. … The fidelity bond required under ERISA specifically insures a plan against losses due to fraud or dishonesty (e.g., theft) by persons who handle plan funds or property.
How do I get a fidelity bond?
While you can apply for a fidelity bond if you are an employer, you can also recommend that your employee purchase a fidelity bond policy. Self-employed individuals cannot quality for a fidelity bond. Most bonds are obtained through a surety company.