Lack of Fidelity Bond

[Guest Keith N]

Has anyone ever had a client who couldn't qualify for a fidelity bond? Apparently due to their financial position they are not able to obtain the required bond coverage.

Is this a qualification issue?

If I check the box on the 5500 that they do not have coverage will that trigger an audit?

Any ideas?

[Mike Preston]

Somebody is feeding somebody a line. Financial condition has nothing to do with the issuance of a fidelity bond. The issue might be related to other things, however. In any event, if the fiduciaries can't get the necessary insurance, get different fiduciaries.

[AndyH]

My understanding is that it would add to the probability of an audit, though not necessarily cause one. There are certainly worse bad answers.

At least pre-EFAST, questions answered in certain manners were tallied on a points system, and if you get so many points, then guess what happens.

I don't know if that has changed or not, however. I doubt it.

[Blinky the 3-eyed Fish]

If you click that box on the bottom of the first page of the Schedule B, that is worth 100,000 points and most assuredly will bring on the audit.

[AndyH]

and alarms ring and red lights flash at the processing center. Then they send you an automatic email if you're dumb enough to give the IRS your email address!

oops. Actually it's just the PBGC that asks for your email address, but perhaps they "share" the Schedule B.