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ERISA Bond Requirement!
It is a requirement under ERISA
that all pension plans 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 (
This requirement is monitored by
the
To
determine what you should have for coverage and or Purchase your
*************
ERISA
Bond go to this link: Colonial Surety Company Direct
Click
Here for NON
Qualified investment coverage regulations
29
§
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 nor 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in effect until it is amended or withdrawn in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,
29
§
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
§
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
§
Section
Number: 2580.412-11
§
Section Name: Statutory
provision.
Section
13
requires that the amount of the bond be fixed at the
beginning
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.