What is an ERISA Bond?


ERISA stands for Employee Retirement Income Security Act. An ERISA bond protects your employee benefit plan against acts of dishonesty such as fraud, theft, and forgery. To use, your employee benefit, retirement, or other plans must be specifically named or indicated on the bond.

Why Do You Need?

Businesses often use ERISA bonds to protect themselves and their employees. State laws vary, but in general, any person who handles funds or property of an employee benefit plan must be bonded, unless they are covered under an ERISA exception. People who must be bonded include employee boards and organizations, trustees, and in some cases, officers and supervisors. The service providers of an employee benefit plan must be bonded as well.

What Qualifies You?

You must have an ERISA bond if any of your duties fall under the definition of handling money or property. Actions that fall under this definition include but are not limited to –

  • Power to transfer money or property from an employee benefit plan to yourself or a third party, including the employees who are covered under the benefit plan
  • Physically accessing money or property in any form, including deeds and checks
  • Negotiating property that falls under the benefit plan
  • Supervising activities or decisions regarding these or other forms of money handling

Any person who undertakes these duties falls under the protection of an ERISA bond and is liable should fraudulent acts be committed in regard to an employee benefit plan.

How Do I Get One?

First, familiarize yourself with the types of businesses that need this type of bond. Under federal law, your business may be exempt. Certain, banks, brokers, and insurance companies may fall under this exemption. You must also know how much coverage your ERISA bond is required to provide for employees; this changes depending on your business. Contact Smith Bond and Surety for a free consultation regarding these bonds.