The Employee Retirement Income Security Act (ERISA) sets rules and standards of conduct for private sector employee benefit plans and those that invest and manage their assets. ERISA, which is administered by the U.S. Department of Labor (DOL), was established to address public concern that funds of private pension and other employee benefit plans were being mismanaged and abused. An important requirement of the ERISA law is that people who handle plan funds and property must be covered by a surety bond. This surety bond protects employee benefit plans 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 untruthful acts. Deductibles and other similar features are prohibited for coverage of losses, and it is important to make sure the plan is named as an insured party on the bond.
It is unlawful for any person to receive, handle, disburse or otherwise exercise custody or control of plan funds or property without being bonded. Bonding is usually necessary for the plan administrator and those officers and employees of the plan or plan sponsor that handles funds. In addition, bonding may be required of other persons, such as service providers to the plan that have access to plan funds or decision-making authority. Bond amounts are equal to at least 10% of the amount of funds handled in the preceding year by the person being bonded. The bond amount cannot be less than $1,000, and the DOL cannot require a plan official to be bonded for more than $500,000, or $1,000,000 for plans that hold employer securities. It is recommended that you contact the Department of Labor for the specific bond amount you will need prior to bonding.
Pacific Surety is licensed in all 50 states and can obtain approvals for almost all credit situations. We offer industry-low rates, and once our simple application has been completed we can have pricing to you within hours. If you have any specific questions, please contact our knowledgeable underwriting staff.