What is an ERISA Bond?
ERISA bonds, also known as fidelity bonds, are a type of insurance required by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA is a federal law in the United States that sets standards for private pension plans to protect the interests of participants and beneficiaries. ERISA bonds are specifically mandated under Section 412 of ERISA.
These bonds serve as a form of protection for the assets of employee benefit plans against dishonest acts by individuals who handle the funds or other property of the plan. The purpose of requiring ERISA bonds is to ensure that there is a way to recover losses in case of fraudulent or dishonest activities by plan officials or employees.
In Oregon, as in other states, entities subject to ERISA regulations, such as plan sponsors, fiduciaries, and others who handle plan assets, are required to obtain and maintain fidelity bonds. The bonds typically cover acts of fraud or dishonesty, such as theft or embezzlement, committed by individuals handling plan funds.
It's important for plan sponsors and fiduciaries in Oregon to comply with ERISA bonding requirements to avoid penalties and to safeguard the financial interests of participants and beneficiaries in employee benefit plans. The specific bonding requirements, including the amount of coverage needed, may vary based on the size of the plan and other factors, so it's advisable to consult with legal and financial professionals for guidance tailored to the particular situation.