#12
High Risk
Not Having a Fidelity Bond
Fidelity bonds are required insurance protecting plans against losses, with missing bonds triggering DOL audits.
- Potential Consequences
- DOL audits
- ERISA violations
- Unprotected plan assets
- Increased scrutiny
- Prevention Tips
- Obtain fidelity bond covering 10% of plan assets
- Ensure minimum $1,000, maximum $500,000 coverage
- Review and renew bond annually
- Maintain documentation of bond coverage
- Include bond requirements in fiduciary procedures
Need Expert Guidance?
Don’t let this mistake jeopardize your plan. Get professional help from experienced fiduciary advisors.
It is so easy to overlook but so important not to. Plan Sponsors are required to be covered by a Fidelity Bond. A Fidelity Bond is an insurance policy that protects the plan against losses other than those caused by market movements.
Fidelity bonds must cover at least 10% of plan assets with a minimum of $1,000 and a maximum of $500,000. They are relatively inexpensive and need to be reviewed and renewed annually.
The most important part of this discussion is what happens if you do not have a Fidelity Bond. If discovered, your chance for a Department of Labor Audit goes up significantly. And if you have never had a DOL audit… Let’s just say that you should avoid this at all costs.
"If you ever get a colonoscopy, you should really insist they give you no drugs — then you do get to see what it's like to go through a Department of Labor audit."
— Anonymous
