fidelity bond w/inflation guard

Haven't seen this before. Fidelity bond coverage is lower than 10% needed, set at $20,000, but according to the agent, has a built in 'inflation guard' up to $500,000.

Assuming that is fine, what would we report on the 5500?  In this case $500,000 is greater than plan assets even.

I thought they were quite common in the small plan market. I'd report 10% of the assets as the bond amount as I'm fairly certain that most of those increase bond protections are capped at the lessor of 10% of assets or $500,000 if you read the fine print.

Typically the inflation guard rider requires the bond to cover 10% at the time it's purchased, and only then would the increase be in play if needed.  (Still waiting for my first claim on their bond.)

I used to do 10% of the BOY asset value on the 5500, but I forget the specifics as to why it wouldn't have been the EOY value.

In my experience they say the plan is covered for $X but the coverage will increase to the amount required by ERISA (which is 10% of BOY assets).

That's why I generally put 10% of opening assets for the bond.

We see this very consistently now.

For the micro market (in the 1990s), I saw fidelity-bond insurance contracts that stated the coverage limit not by an amount but by a formula. For example:

The Coverage Limit is the lesser of $500,000 or 10 percent of the funds the Insured handled, but no less than $1,000.

Is it still done that way?

Just read Q35 to DOL FAB 2008-04, it's 10% of the prior year's amount "handled", so unless one wants to get retentive and look for the highest asset value at any point during the prior year, I like the prior EOY/current BOY thinking.