ERISA bond and 403(b) custodial accounts

[QDROphile]

It appears that a while a custodial account arrangement of a 403(B) plan that is subject to ERISA may be exempt from the trust requirments of ERISA by qualifying under section 403(B)(7) of the tax code, the brokerage company that is the custodian must still be bonded under under section 412 of ERISA if company is not a regulated trust company or insurance company. Any arguments to the contrary?

[Guest RJT]

You are generally correct , but the exemptions are a bit broader. See the regs at 2580.412.Often, the brokerage account can well be held in a trust company or other exempt organization. But these exemptions run only yo funds handled by those organizations. If plan funds are being handled by others (such as a consolidated remitter), even though they eventually end up in an exempt organization, bonding will still be required.