What Is ERISA's Bond Requirement

[steve45]

I'm working on a plan with year end asset on 12/31/2021 $125,000 at John Hancock & plan made profit sharing contribution amount of $30,000.

Do I need to consider bond amount on $155,000 (with PS receivables) of 10% or only count on $125,000 (John Hancock)? 

 

Thanks!

[Belgarath]

If you are working on the 2021 plan year, then the bond is generally based on the prior year value - while most folks use the prior year 12/31 value, it technically is the highest amount handled during that prior year.

If the value increases during 2022, you don't need to increase the bond.

Most of them that I see now have an automatic increase rider on the bond as assets increase.

[Peter Gulia]

BenefitsLink neighbors, does the insurance premium differ between a coverage limit of $125,000, $250,000, or $500,000?

[Belgarath]

I believe it depends upon the company. I've seen "packages" where price is locked in for 2 or 3 years, even if bonding amount increases, etc., etc. - but I really don't have any direct contact with actual insurance companies for ERISA bonds - we just tell the employer to get the bond, and to contact their insurance broker.

Here's the list of approved vendors:

https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html

[RatherBeGolfing]

19 minutes ago, Peter Gulia said:

does the insurance premium differ between a coverage limit of $125,000, $250,000, or $500,000?

Yes, but not by much.

I would also say that there is no reason to NOT have a bond with an inflation guard / escalation rider/ add your favorite name here.  There is just not enough of a premium difference.