Understanding ERISA Fidelity Bonds and Fiduciary Liability Coverage

Understanding ERISA Fidelity Bonds and Fiduciary Liability Coverage

ERISA fidelity bonds protect the plan against fraud or dishonesty by those handling plan assets; fiduciary liability insurance covers breaches of fiduciary duty. They serve different purposes.

Two Different Protections

ERISA fidelity bonds protect the plan against fraud or dishonesty by those handling plan assets; fiduciary liability insurance covers breaches of fiduciary duty. They serve different purposes.

Bond Amount and Scope

Bonds generally must be at least 10% of plan assets handled, with minimums and caps per regulation.

Some assets (e.g., non‑qualifying) may trigger higher requirements.

Governance Tips

Verify bonding for all ‘handlers’ and review fiduciary policy coverage, exclusions, and limits annually.

Plan Sponsor Action Checklist

Checklist

Confirm your ERISA bond amount and carriers meet DOL rules.
Checklist

Map who ‘handles’ plan assets and ensure all are bonded.
Checklist

Review fiduciary liability insurance with your broker annually.
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References

  • DOL EBSA: ERISA fidelity bond publication; DOL FAB 2008‑04 on bond vs. fiduciary insurance.