Bond question; non-qualifying assets are more than 50% of total trust

[KateSmithPA]

I have searched the boards on this subject, but I haven't found an answer to my client's dilemma. If it has been addressed. I probably did not ask the right question in my search.

Plan has about $1,660,000 in non-qualifying assets. Total plan assets are $2,723,000. Therefore, non-qualifying assets are greater than 50% of total plan assets.

This seems to be the problem for obtaining a bond on the non-qualifying assets. If the non-qualifying assets totaled less than 50% of the total assets, then client could get a bond on the $1,660,000.

Are others finding this to be the standard? Or, are there those of you, out there, who are aware of companies that would issue a bond to a client in this situation.

Thanks.

[Lynn Campbell]

Back in 2002 I was able (through Travelers) to get a $1.6 million bond for a Plan with total assets of just over $2 million. The $1.6 million was needed to cover the non-qualifying assets. I have not had recent experience with Travelers for this type of coverage.

[Belgarath]

Lynn - I'm just curious - how did it compare in terms of cost? By that I mean, how much would an accountant have charged to do the audit, as opposed to how much did Travelers charge for a bond this size? I'd be interested to know for background purposes, as clients sometimes ask which is cheaper. To which I have to reply "depends upon the accountant and the bonding company." But I'd be interested to know how it worked out in your case. Thanks!

[KateSmithPA]

Lynn,

Thank you for your reply. I will have the client contact a Traverler's agent to see if they might be able to help.

Kate Smith

[Lynn Campbell]

Belgarath - I have checked my file and the 3-year premium was just over $1,000. I assumed this was cheaper than the audit for even 1 year. Any input would be interesting. Thanks!