ERISA BOND

[Guest Serena]

Section 412 of ERISA requires that the plan have a fidelity bond, unless the plan meets one of the statutory exceptions.

I have an insurance company that is being liquated by the State Dept of Insurance, this could take until the end of the year or next year, in the meantime they stay in business and they want to continue their 401k plan. They have not been able to renew their bond because of the pending liquidation. Can they operate an ERISA plan without a bond, or I should say, what is the result if they do? I cannot find a stated penalty under ERISA. The fiduciary risks DOL investigation, and remains personally liable for any crimes or acts of commission. If DOL audits the plan they are likely to find this as a deficiency but what other consequences could there be if the plan does not have a bond?

Thanks

[david rigby]

Very likely this issue has arisen before. Have you checked with the DOL? Q&A here, esp. #4:

http://www.dol.gov/ebsa/regs/fab2008-4.html

In addition, uyou could contact the EBSA:

http://www.dol.gov/dol/contact/

[Guest Serena]

Thank you