Fiduciary Bond Not required for One-Participant Keogh Plan?

[Guest SSCARO]

I have been told by a colleague that he believes he knows of a case where a one-participant keogh was not required to carry a fiduciary bond.

I work with such a plan, and was wondering if anyone could point me to a specific exemption from the ERISA bonding requirement.

Thanks.

[AndyH]

Your colleague is correct. A one person owner/employee plan does not need a bond. I haven't gone to the reg, but the Pension Answer Book cites DOL Reg 2510.3-3.

[Guest Jim Hunzelman]

I assume that the one participant you are talking about is the owner of the business that sponsors the plan and not an employee. Title I of ERISA, which, among other things, includes the bonding requirement, only applies to an "employee benefit plan". For purposes of Title I a plan that covers only the owner of the business (and his/her spouse) is not an "employee benefit plan" and, thus is exempt from Title I. The definition is a little more involved than this, but the gist of it is that most plans that cover only owners and spouses do not have to purchase bonds or comply with other Title I provisions.

[AndyH]

Agreed. Well stated.