# Who Needs an ERISA Fidelity Bond? **Who needs an ERISA fidelity bond?** Federal law generally requires every person who handles funds or other property of an ERISA-covered employee benefit plan to be covered by a fidelity bond. That typically includes plan sponsors, trustees, administrators, and any employee who can transfer, disburse, or direct plan assets. ## Who typically needs this bond - Sponsors, trustees, and administrators of 401(k) and other retirement plans - Fiduciaries of self-funded health and welfare plans that hold plan assets - Company employees who sign checks, move money, or direct investments for the plan - Third-party administrators and service providers who handle plan funds and are not covered by their own qualifying bond ## What triggers the requirement - Starting an ERISA-covered plan, since the bond is expected to be in place from day one of handling funds - Plan asset growth, because the required amount is recalculated at 10 percent of funds handled each plan year - Adding employer securities to the plan, which raises the cap to 1,000,000 dollars - Filing Form 5500, which asks directly whether the plan was covered by a fidelity bond ## Common exemptions - Most banks, insurance companies, and registered broker-dealers that meet their own federal bonding or capital rules - Plans with no employees covered other than an owner and spouse, which are generally outside ERISA's bonding rule - Unfunded plans that pay benefits only from an employer's general assets ## The 10 percent rule, in practice The required bond amount is at least 10 percent of the funds each person handled in the prior plan year, subject to the 1,000 dollar minimum and the 500,000 dollar cap (1,000,000 dollars with employer securities). Most sponsors size one bond to the plan's total assets handled and name the plan as the insured, which covers everyone who handles plan funds under it. ## ERISA bond vs fiduciary liability insurance The ERISA fidelity bond protects the plan against theft or fraud by people who handle its money, and it is the coverage the law requires. Fiduciary liability insurance protects the fiduciaries themselves against breach-of-duty claims and is optional. Carrying one does not satisfy the requirement for the other. ## What it costs ERISA bonds are priced off the bond amount, not individual credit, and are typically inexpensive relative to the coverage. Because the statutory amount is a straight calculation from plan assets handled, quotes are usually instant once the Form 5500 asset figure is known. ## FAQ **Does a solo 401(k) need an ERISA bond?** Generally no. Plans that cover only a business owner, or an owner and spouse, with no common-law employees are typically outside ERISA's bonding requirement. Adding an eligible employee usually changes that. **Is an ERISA bond the same as fiduciary liability insurance?** No. The bond is required and protects the plan against dishonesty by people handling its funds. Fiduciary liability insurance is optional and protects the fiduciaries against breach-of-duty claims. **How is the ERISA bond amount calculated?** At least 10 percent of the funds handled in the prior plan year, with a 1,000 dollar minimum and a 500,000 dollar cap, or 1,000,000 dollars for plans holding employer securities. This page describes how the requirement typically works. Whether a specific business or appointment needs the bond is set by the obligee, statute, or court order that applies to you, so confirm against the current requirement before relying on it. ## Related - [ERISA fidelity bond details and quotes](/bonds/fidelity/erisa) - [ERISA bond cost](/bonds/cost-index/erisa) - [How surety bonds work](/bonds/how-it-works) Last reviewed 2026-07-29. --- ## How to cite this page Cite as: "Who Needs an ERISA Fidelity Bond?." Cornerstone Surety Bonds. https://cornerstonesuretybonds.com/bonds/guides/who-needs-an-erisa-bond Published by Cornerstone Surety Bonds. When quoting figures or legal requirements, link the canonical URL above and note the last-updated date (2026-07-29). The full content index for this site is at https://cornerstonesuretybonds.com/llms.txt.