Is your retirement plan not appropriately covered by an ERISA Required Bond? Schneider Downs Retirement Solutions works with plan sponsors to ensure that ERISA bonding is sufficient each year. View the brief video below to learn more about the importance of these bonding requirements.

Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Past performance is no guarantee of future results….(read more)

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Does your ERISA Bond properly cover your company’s retirement plan?

When it comes to protecting your company’s retirement plan, the Employee Retirement Income Security Act (ERISA) Bond is a crucial component. This bond is designed to safeguard the retirement plan’s assets from any potential losses resulting from fraudulent or dishonest acts. However, it is essential to ensure that your ERISA Bond adequately covers your company’s retirement plan.

ERISA requires most retirement plans to have fidelity bond coverage for at least 10% of the plan’s assets. The minimum required bond amount is $1,000, with a maximum of $500,000, depending on the size and complexity of the plan. The bond’s purpose is to provide compensation to the plan in the event of fraud or dishonesty by any individual handling the plan’s assets.

While ERISA does provide guidelines for the minimum bond amount, it is crucial to consider if this amount is enough to cover potential losses effectively. The bond should align with the plan’s total value to ensure adequate protection. For example, if your retirement plan has $5 million in assets, a $500,000 bond may seem insufficient.

It is important to assess the risks associated with your retirement plan’s assets and consider purchasing an ERISA Bond that adequately covers those risks. Some factors to consider include the complexity of investments, the number of participants, and the plan’s overall size.

In addition to assessing the bond amount, it is vital to review the coverage limitations and exclusions within your ERISA Bond policy. Some bonds may have restrictions on coverage for certain types of investments or exclude coverage for specific activities. It is crucial to ensure that your bond covers a wide range of potential risks and is not overly restrictive.

Regularly reviewing your bond coverage is equally important. As your retirement plan grows or changes, it is essential to reassess if your current bond coverage is still adequate. Additionally, changes in the regulatory environment or industry practices may necessitate adjusting the coverage.

Working with an experienced insurance agent or broker can prove valuable in ensuring proper coverage for your retirement plan. They have expertise in understanding ERISA Bond requirements and can guide you in selecting the appropriate coverage for your specific needs. Their knowledge can help you navigate the complexities of the bond and minimize any potential gaps in coverage.

Another option to enhance protection is to consider additional coverage beyond the minimum requirements. While this is not mandatory, it can provide an extra layer of security for your retirement plan. Additional coverage can be tailored to specific risks and offer higher protection limits, granting you peace of mind.

In conclusion, verifying whether your ERISA Bond adequately covers your company’s retirement plan is a critical step in protecting your assets and your employees’ financial well-being. Ensure that your bond amount aligns with the plan’s value and consider the complexities of your plan when determining coverage needs. Regularly reviewing and updating your bond coverage, as well as consulting with insurance professionals, can help you navigate the complexities of ERISA Bond requirements and mitigate potential risks effectively.