Bonding

We have a client with two plans (DB & 401k), and there are only two participants - the owner and his mother.  They have asked if they must have a bond.

I think that since technically it is an ERISA plan, a bond would be required, but it is only owner and momHow would you suggest I respond?

36 minutes ago, Cynchbeast said:

We have a client with two plans (DB & 401k), and there are only two participants - the owner and his mother.  They have asked if they must have a bond.

I think that since technically it is an ERISA plan, a bond would be required, but it is only owner and momHow would you suggest I respond?

"Get a bond".  We actually handle that process with the vast majority of our clients, so we would just do it!

Option 1: If the company is a partnership, make mom a partner.

Option 2: Get legally married to mom.

Option 3: Get a bond.

I will let you decide which of these you like the best

Well, just to be contrary, we have a few clients who haven't gotten bonds and there seem to be no repercussions.  On audit, our experience is that the IRS will say "get a bond."  I have a recollection of reading about a case where the IRS dropped the hammer on someone but it was only because they were obstinate and essentially refused after multiple warnings.

5 hours ago, Bird said:

Well, just to be contrary, we have a few clients who haven't gotten bonds and there seem to be no repercussions.  On audit, our experience is that the IRS will say "get a bond."  I have a recollection of reading about a case where the IRS dropped the hammer on someone but it was only because they were obstinate and essentially refused after multiple warnings.

Agreed; the answer is always "get a bond".  However, it is disclosed on the 5500 and that's not a good thing to not have when it is legally required. It may be legally required, but it is also STUPID.  Most of my clients are pretty smart, and if they are going to steal money  from the plan, they are probably going to steal more than 10%!!!!