Employee Benefits Security Administration issues guidance on fidelity bonding for employee benefit plans

Archived News Release — Caution: Information may be out of date.

Washington – The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) today released Field Assistance Bulletin (FAB) 2008-04, which provides guidance to the agency’s national and regional offices on the fidelity bonding requirements under section 412 of the Employee Retirement Income Security Act (ERISA).

Section 412 of ERISA requires all persons, including fiduciaries, who handle funds or other property of an employee benefit plan (otherwise referred to as plan officials) to be bonded in accordance with section 412 and the department’s regulations unless they are covered by an exemption. Each plan official is required to be bonded for at least 10% of the amount he or she handles, but in no event less than $1,000. The maximum bond amount required under section 412 with regard to any one plan is $500,000 per plan official, or $1 million per plan official in the case of a plan that holds employer securities.

EBSA investigators frequently confront fidelity bonding questions during their examinations of ERISA plans. FAB 2008-04 was developed to address these issues and is presented in a question-and-answer format consisting of 42 frequently asked questions (FAQs). The guidance in the FAB covers a variety of issues related to compliance with ERISA’s fidelity bonding requirements, including, among other things: whether a bond may use an omnibus clause to name insured plans; how to calculate the bond amount when multiple plans are covered under a single bond; whether the $1 million bond maximum applies in the case of plans that hold employer securities solely as a result of investments in pooled investment funds; and whether third party service providers are subject to the bonding requirements if they handle plan funds.

The FAB is part of the department’s ongoing compliance assistance program to help employers, plan officials, service providers, and others comply with ERISA. Field Assistance Bulletins are available on the Internet at www.dol.gov/ebsa.

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Archived News Release — Caution: Information may be out of date.