Two Plans - Bond Amount?

[emmetttrudy]

A plan sponsor has a DB Plan and 401k Plan. A bond is required up to a maximum of $500k. Is this per Plan? Or would one $550k bond cover both Plans? The 401k Plan has over $5 million in assets so would require a $500k bond on its own. So, would the DB Plan need it's own bond? Possibly another $500k bond if it too has over $5 million in assets? Or I guess both Plans could be listed on the same bond but it's the amount I'm concerned with. Thanks,

[Andy the Actuary]

A plan sponsor has a DB Plan and 401k Plan. A bond is required up to a maximum of $500k. Is this per Plan? Or would one $550k bond cover both Plans? The 401k Plan has over $5 million in assets so would require a $500k bond on its own. So, would the DB Plan need it's own bond? Possibly another $500k bond if it too has over $5 million in assets? Or I guess both Plans could be listed on the same bond but it's the amount I'm concerned with. Thanks,

DOL Reg. 2580.412-(16)© provides, "The Act does not prohibit more than one plan from being named as insured under the same bond. However, any such bond must allow for recovery by each plan in an amount at least equal to that which would be required if bonded separately. This requirement has application where a person or persons sought to be bonded pursuant to the requirements of section 13 have handling functions in more than one plan covered under the bond. Where such is the case, the amount of the bond must be sufficient to cover any such persons having functions in more than one plan for at least 10 percent of the total amount handled by them in all the plans covered under the bond. For example, X is the administrator of two welfare plans run by the same employer and he handled $100,000 in the preceding reporting year for Plan A and $500,000 in the preceding reporting year for Plan B. If both plans are covered under the same bond, the amount of the bond with respect to X shall be at least $60,000 or ten percent of the total handled by X for both plans covered under the bond in which X has powers and duties of handling since Plan B is required to carry bond in at least the amount of $50,000 and Plan A, $10,000."