Fidelity Bonds for 401(k) and Retirement Plans


Federal ERISA Regulations

Where can I find the federal ERISA statute that refers to the bonding requirements?

An electronic version of this statue is availabe on Cornell Law School's website titled "Legal Information Institute (LII)" at the following links:

§ 1112. Bonding, Requisite Bonding of Plan Officials

U.S. Code, TITLE 29, CHAPTER 18, SUBCHAPTER I, Subtitle B, part 4 , § 1112

§ 502. Bonding of officers and mployees of labor organizations; amount, form, and placement of bonds; penalty for violation


How large of a bond do I need to obtain?

The Act requires a bond limit equal to 10% of the maximum assets that the insured thinks will be held in the plan over the fiscal year (per the federal statute). The maximum bond limit required by federal statute is $500,000 (unless the insured is advise otherwise by the U.S. Department of Labor).

What protections do the fiduciary rules of ERISA provide?

ERISA protects plans from mismanagement and misuse of assets through its fiduciary provisions. ERISA defines a fiduciary as anyone who exercises discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan's investment committee.

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. They also must avoid conflicts on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, service providers, or the plan sponsor.

Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.

Apply for your ERISA bond online.