ERISA (Employee Retirement Income Security Act)  bonds are required by federal law to cover funds in employee pension plans and profit sharing plans.  The bond must equal at least 10% of the plan value at any time.  The purpose of the bond is to guarantee coverage for funds in the event of fraud, embezzlement, or misappropriation by the fund manager, employees, financial institutions, or any other entity or person that has access to the fund information.

All companies, large and small, that have any type of employee plan with a value over $10,000, must comply to the ERISA standards.  These standards are regulated by the federal government and information can be found on the web here.

Here is an overview of ERISA bonds, as stated on the Department of Labor Website:

“The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in private industry. ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit. ERISA requires plans to regularly provide participants with information about the plan including information about plan features and funding; sets minimum standards for participation, vesting, benefit accrual and funding; requires accountability of plan fiduciaries; and gives participants the right to sue for benefits and breaches of fiduciary duty.

ERISA also guarantees payment of certain benefits through the Pension Benefit Guaranty Corporation, a federally chartered corporation, if a defined plan is terminated.”

The cost of ERISA bonds are based on the plan value and generally are an inexpensive way to protect your employee profit-sharing and pension plans.  These bonds are written in the name of the plan and not in the name of the business entity that provides them.  An insurance bond is a separate instrument issued by insurance companies or bond companies to protect your needs. If you, or someone you know, is interested in this type of coverage, please feel free to contact us at your earliest convenience.  We can walk you through the process and make sure you get the proper coverage necessary.