401(k) Plan Bonding Requirement

What is a Bond?

ERISA generally requires that every fiduciary of an employee benefit plan, such as the 401(k) Plan we created for you and every person who handles funds or other property of such a plan shall be bonded. Thus, all fiduciaries (including you as Trustee of the Plan) that have authority and control over the plan’s assets are required to be bonded.

The bond you need is commonly referred to as a “Fidelity Bond.” A bond is much like an insurance policy. This bonding requirement is intended to protect employee benefit plans, such as a 401(k) Plan, from risk of loss due to fraud or dishonesty on the part of persons who ”handle” plan funds or other property.

Am I required to obtain a Bond?

Yes, generally each plan official must be bonded in an amount equal to at least 10% of the amount of plan assets in the preceding year.

How do I obtain a Bond?

The amount of the bond must cover at least 10% of the plan assets. The bond amount must exceed at least $1,000 but need not exceed $1,000,000. The following chart provides sample premiums for a bond, based on varying amounts being held in the 401(k) Plan:

Amount Handled10%1 yr. premium5 yr. premium
$100,000$10,000$100.00$250.00
$200,000$20,000$101.12$252.80
$300,000$30,000$121.90$304.76
$400,000$40,000$138.92$347.30
$500,000$50,000$155.93$389.82

If you are looking to secure a bond provider it will be important for you to ask that provider for a schedule of their fees.

Once the bond requirement is triggered, you can order a bond online from a number of different providers. The bond providers listed below are simply illustrative. You can find other bond providers by doing a web search under “ERISA bond.” Among the providers are:

Colonial Surety Direct
BondsExpress, a Ralf Rigo Agency
Poulton Associates, Inc.
South Coast Surety
Travelers

Additional information regarding 401(k) bonding requirements can be found on the Department of Labor’s website.

Scroll to Top