What are ERISA Bonds?

An ERISA bond is a type of surety bond that covers administrators and other fiduciaries of retirement plans regulated by ERISA, which stands for The Employee Retirement Income Security Act of 1974.  This act imposes requirements on trustees of most retirement and health plans established by private entities. One of these requirements is to have an ERISA bond with a coverage amount equal to at least 10% of the plan assets that the fiduciary handles. In most cases, the minimum is $1,000 and the maximum amount is $500,000. For plans that include employer-issued securities such as company stock, the maximum coverage amount is $1 million.

ERISA bonds protect against loss due to acts of fraud and dishonesty by retirement plan fiduciaries.  Examples include:

  • Theft or misuse of plan funds
  • Forgery of documents
  • Assuming duties that create a conflict of interest
  • Using their position as a fiduciary for personal profit

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