It is a requirement under ERISA that pension plans that have participants other than the owners be covered by an ERISA Bond. The amount of the bond must be equal to or greater than 10% of the value of the plan’s assets as of the beginning of the plan year. Below are the rules taken straight from the Department of Labor’s (DOL) webpage.
This bonding requirement is monitored by the DOL through the annual 5500 filing that PATA or you files annually. If your plan does not have an ERISA bond you can click on the picture to the right to get an estimate of the cost of a 5 year bond.
To determine what you should have for coverage and or Purchase your a bond you can follow the following link: GET a bond!
~Here are the provisions straight from the code~
29 CFR 2582.8478-4 - Permanent amount of the bond.
§ Section Number: 2582.8478-4
§ Section Name: Permanent amount of the bond
(a) General. Under the authority of section 8478(b)(1) of the Federal Employees’ Retirement System Act of 1986 (FERSA), the amount of a bond for each person, group or class to be bonded shall not be less than 10 percent of the amount of funds handled by such person, group or class with respect to any fiscal year of the Fund. In no case shall such bond be less than $1,000 or more than $500,000. However, the Secretary of Labor reserves the authority under section 8478(b)(1) of FERSA to prescribe an amount in excess of $500,000, after due notice and opportunity for hearing to all interested parties, and other consideration of the record.
(b) Effective date. This section shall become effective January 1, 1990, and remain in effect until it is amended or withdrawn in accordance with section 8478(b)(1) of FERSA. [54 FR 53609, Dec. 29, 1989]
29 CFR 2580.412-7 - Statutory provision—scope of the bond.
§ Section Number: 2580.412-7
§ Section Name: Statutory provision—scope of the bond
The statute requires that the bond shall provide protection to the plan against loss by reason of acts of fraud or dishonesty on the part of a plan administrator, officer, or employee, directly or through connivance with others.
29 CFR 2580.412-9 - Meaning of fraud or dishonesty.
§ Section Number: 2580.412-9
§ Section Name: Meaning of fraud or dishonesty.
The term “fraud or dishonesty” shall be deemed to encompass all those risks of loss that might arise through dishonest or fraudulent acts in handling of funds as delineated in Sec. 2580.412-6. As such, the bond must provide recovery for loss occasioned by such acts even though no personal gain accrues to the person committing the act and the act is not subject to punishment as a crime or misdemeanor, provided that within the law of the state in which the act is committed, a court would afford recovery under a bond providing protection against fraud or dishonesty. As usually applied under state laws, the term “fraud or dishonesty” encompasses such matters as larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, willful misapplication or any other fraudulent or dishonest acts. For the purposes of section 13, other fraudulent or dishonest acts shall also be deemed to include acts where losses result through any act or arrangement prohibited by title 18, section 1954 of the U.S. Code.
"Amount of the Bond"
29 CFR 2580.412-11 - Statutory provision.
§ Section Number: 2580.412-11
§ Section Name: Statutory provision.
Section 13 requires that the amount of the bond be fixed at the eginning of each calendar, policy or other fiscal year, as the case may be, which constitutes the reporting year of the plan for purposes of the reporting provisions of the Act. The amount of the bond shall be not less than 10 per centum of the amount of funds handled, except that any such bond shall be in at least the amount of $1,000 and no such bond shall be required in an amount in excess of $500,000: Provided, That the Secretary, after due notice and opportunity for hearing to all interested parties, and after consideration of the record, may prescribe an amount in excess of $500,000, which in no event shall exceed 10 per centum of the funds handled. For purposes of fixing the amount of such bond, the amount of funds handled shall be determined by the funds handled by the person, group, or class to be covered by such bond and by their predecessor or predecessors, if any, during the preceding reporting year, or if the plan has no preceding reporting year, the amount of funds to be handled during the current reporting year by such person, group, or class, estimated as provided in the regulations in this part. With respect to persons required to be bonded, section 13 shall be deemed to require the bond to insure from the first dollar of loss up to the requisite bond amount and not to permit the use of deductible or similar features whereby a portion of the risk within such requisite bond amount is assumed by the insured. Any request for variance from these requirements shall be made pursuant to the provisions of section 13(e) of the Act.
Copyright © 2020 PATA - All Rights Reserved.