What is a fidelity bond?
A fidelity bond is a type of insurance that protects a retirement plan against losses resulting from fraudulent or dishonest acts of those covered by the bond. ERISA requires that every fiduciary of a benefit plan, as well as all persons who handle funds or other property of a plan (plan officials), must be bonded. The bond is for the protection of the plan and does not benefit any plan official or relieve any plan official of any obligation to the plan. The amount of the bond must be a minimum of 10% of the plan assets. However, it cannot be less than $1,000 and not more than $500,000. Please note: effective for plan years beginning after January 1, 2007, the maximum bond amount is increased to $1,000,000 for plans that hold employer securities.
