ERISA Bond Audits


The Pension Department, Inc., has learned of a new program from the Department of Labor.  The  new program launched by the DOL is aimed at ERISA Bonds.  ERISA Section 412 and related regulations (29 C.F.R. § 2550.412-1 and 29 C.F.R. Part 2580) generally require that every fiduciary purchase an ERISA Bond equal to 10% of the assets in the plan.

These bonding requirements are intended to protect employees from the risk of loss due to fraud or dishonesty by a trustee or fiduciary.  The program will target retirement plans who do not have an ERISA bond or who don’t have a large enough bond to properly cover the assets.

Companies may start to get letters from the Department or Labor stating that they have 15 days to get properly bonded or face fines, penalties, and/or be audited by the Department of Labor.  If you have an ERISA bond and you feel you are properly bonded you will have to amend your Form 5500 and supply proof of your ERISA Bond. If you already have an ERISA bond, make sure that you renew your bond each year and make sure upon your renewal that the bond is large enough to cover at least 10% of the assets.

Some retirement plans are not required to purchase a bond. Self employed retirement plans and solo-k’s are not required to purchase a bond. Thus if you have a plan with no employees and/or only you and your spouse participate, you do not need to purchase a bond. Companies that have employees who choose not to participate in the retirement plan will still need to buy a bond.

To purchase a bond, visit our ERISA Bond webpage.

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