An ERISA bond is a fidelity bond that protects your employee benefit plan if someone who handles its money commits fraud or theft. If your Oklahoma business sponsors a 401(k), profit sharing or other retirement plan, the people who handle plan funds must be bonded for at least 10 percent of what they handle, with a $1,000 minimum and a $500,000 cap per plan. We sell the ERISA bond online through RLI, the surety we write most of our bonds with.
Who needs an ERISA bond?
Under ERISA section 412, every person who handles the funds or other property of a covered benefit plan has to be bonded. In a small business that is usually the owner, the office manager or bookkeeper who sends payroll contributions to the plan, and anyone who can approve a loan or a distribution. The plan is the named insured, so the bond pays the plan, not the business, if money goes missing.
Plans that are completely unfunded, where benefits are paid only from the company's general assets, are exempt. Most 401(k) plans hold their money in a trust or with a recordkeeper, so they are not.
How much ERISA bond coverage do I need?
| Rule | Amount |
|---|---|
| Required coverage | At least 10% of the plan funds each person handles |
| Minimum required by law | $1,000 |
| Most the law requires, most plans | $500,000 per plan |
| Most the law requires, plan holds employer securities | $1,000,000 per plan |
Example: a plan with $300,000 in assets needs at least a $30,000 bond. As the balance grows, so does the requirement. The three year bond with an inflation guard raises the coverage for you, so you do not fall short in year two or three.
Buy your ERISA bond online
RLI issues the Oklahoma ERISA bond online in amounts from $5,000 to $500,000. You enter the plan's total assets, the plan sponsor and whether any plan money is invested in your own business, and the bond is emailed to you when it is issued. Three year terms with an inflation guard are available too.
Buy the 3 Year ERISA Bond with Inflation Guard
Need more than $500,000, or have questions first? Request a bond quote or call us.
ERISA bond vs fiduciary liability insurance
They are easy to mix up and they are not interchangeable. The ERISA bond protects the plan from dishonest acts by the people handling its money, and federal law requires it. Fiduciary liability insurance protects you, the plan sponsor, if you are sued over how the plan was run, such as poor investment choices or late contributions. It is optional and it does not satisfy the bonding rule. Many employers carry both.
Your benefits in one place: group health and the ERISA bond
ERISA is the same federal law that governs the group health plan you offer your employees. If you have, or are shopping, group health insurance for your Oklahoma business, we can set up the ERISA bond for your retirement plan at the same time, along with group dental and vision. One broker and one renewal calendar, so the bond is never the thing that gets forgotten when your recordkeeper asks for proof.
Whether a health or welfare plan also needs its own bond depends on how it is funded. We look at that when we review your benefits with you.
Other bonds for Oklahoma employers
Cleaning companies and other service businesses often need a janitorial or dishonesty bond for their clients, and licensed trades need a contractor license bond. See every bond we write on our Oklahoma surety bonds page.