ERISA bond coverage for 401k and employee benefit plans

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ERISA bond coverage for retirement and benefit plans

The Employment Retirement Income Security Act, commonly referred to as ERISA, requires certain employee benefit plans to carry a fidelity bond. ERISA bond coverage is designed to protect retirement plans such as 401k programs from losses caused by fraud or dishonest acts involving plan funds. Shepherd & Associates works with San Jose and Bay Area employers to help them understand these federal requirements and secure the proper bond coverage for compliance.


Many plan sponsors are surprised to learn that an ERISA bond is not optional for most qualified retirement plans. Businesses across Silicon Valley, including professional service firms, technology companies and growing corporate teams, often seek clarification about how the bond works and how much coverage is required.

Fidelity bond protection for 401k and benefit plan assets

An ERISA bond is a type of fidelity bond that protects employee benefit plans against loss caused by acts of fraud or dishonesty by individuals who handle plan funds. This may include plan trustees, fiduciaries, administrators or employees with access to retirement assets.


Unlike fiduciary liability insurance, which protects decision makers against claims of mismanagement, an ERISA bond specifically protects the plan itself. The U.S. Department of Labor generally requires coverage equal to at least ten percent of plan assets, subject to minimum and maximum thresholds. Shepherd & Associates helps employers determine the correct bond amount based on current asset levels and regulatory standards.

Compliance for plan sponsors and fiduciaries

Most private-sector employers offering 401k plans or other qualified employee benefit plans are required to maintain an ERISA bond. This includes corporations, professional service firms, nonprofits and other organizations that sponsor retirement plans for employees.


Employers in San Jose, throughout the Bay Area and across multi-state operations frequently review ERISA bond requirements during audits, annual filings or plan expansions. When plan assets increase, bond limits may also need adjustment to maintain compliance. Shepherd & Associates assists with periodic reviews to ensure coverage remains aligned with asset growth and federal standards.

Frequently asked questions about ERISA bond requirements

  • Is an ERISA bond required for all 401k plans?

    Most private-sector 401k plans are required to carry an ERISA bond. Certain exemptions may apply, but most employers must maintain this coverage.

  • How much ERISA bond coverage is required?

    Federal regulations typically require coverage equal to at least ten percent of plan assets, with a minimum and maximum limit defined by law.

  • Does an ERISA bond protect company executives personally?

    No. The bond protects the plan itself against loss due to fraud or dishonesty. Personal protection for fiduciaries requires separate fiduciary liability insurance.

  • What happens if an employer does not maintain the required bond?

    Failure to carry the required bond may result in compliance issues, penalties or complications during Department of Labor audits.

  • How often should ERISA bond limits be reviewed?

    Bond limits should be reviewed annually, especially if plan assets increase significantly.

  • Is an ERISA bond the same as general crime insurance?

    No. While both relate to dishonest acts, an ERISA bond is specifically required for employee benefit plans under federal law.

Understanding the difference in protection

Employers sometimes confuse ERISA bonds with fiduciary liability insurance. These are separate protections serving different purposes.


An ERISA bond protects the plan against financial loss caused by dishonest acts involving plan funds. Fiduciary liability insurance protects plan fiduciaries and decision makers against claims alleging mismanagement, breach of duty or improper administration.


Many organizations in Silicon Valley and across California carry both forms of protection to address distinct risks associated with retirement plan oversight.

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