Bond limit of $500,000

[pbarrett]

If I have a plan with "mixed" assets generating a total of appx $6,000,000. Let's assume 96% are qualifying assets. Does the $500,000 bond limit still hold or would I need to have the client get a bond for $816,000?

($6,000,000 X 96% = $5,760,000 X 10% = $576,000)

$576,000 plus $240,000 (4% non qual) = $816,000

If 100% of the assets were qualifying, could I leave the bond at $500,000?

[R. Butler]

Why do you think the small plan bonding requirement applies? My understanding is that it only if applies less than 95% of the assets constitute qualying plan assets. 96% is greater than 95%, so you should be O.K.

If you had only 94% in qualifying plan assets than the bonding requirement is 100% of the nonqualifying assets. That wouldn't be capped at $500,000, but by the same token it doesn't need to be in addition to the 10%.