Glossary

ERISA bond

A fidelity bond ERISA requires for people who handle benefit plan funds, protecting the plan from theft or fraud and set at 10% of the funds handled.

Also called: ERISA fidelity bond, section 412 bond, ERISA bonding requirement

ERISA section 412 requires every person who handles funds or other property of an employee benefit plan to be bonded, with the plan as the protected party. The bond covers loss of plan assets from fraud or dishonesty. It is fidelity coverage, not liability insurance.

The amount is at least 10% of the funds handled, based on the prior year, with a $1,000 minimum per plan and a $500,000 maximum per plan official. The maximum is $1 million for plans that hold employer securities (DOL Field Assistance Bulletin 2008-04). Say a 401(k) plan holds $2.4 million (a hypothetical): the bond must be at least $240,000. The bond cannot carry a deductible, and the surety must appear on the Treasury Department's Circular 570 list.

Confusion with fiduciary liability is the usual trap. The bond protects the plan against theft; fiduciary liability insurance protects the fiduciaries against breach claims. Neither replaces the other. Some crime policies cover ERISA plan officials only if the coverage is elected, so do not assume the company's crime policy satisfies the rule. The Form 5500 asks whether the plan is bonded, so a gap shows up in a filing.

ERISA fidelity bonds vs fiduciary liability insurance compares the two protections, and ERISA defines the statute behind them.

Last reviewed October 10, 2026

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Related terms

Fidelity bond A two-party bond that works like insurance, reimbursing an employer or its clients for theft and other dishonest acts by employees. Fiduciary liability Coverage for claims that the people running an employee benefit plan breached their duties, such as imprudent investments, excess fees or administrative errors. ERISA The 1974 federal law setting fiduciary, reporting and disclosure standards for private-sector retirement and welfare benefit plans, enforced by the DOL. Employee dishonesty Crime coverage for money, securities or other property lost through dishonest acts by your own employees, intended to harm you and benefit them. Surety bond A three-party guarantee in which a surety promises an obligee that a principal will perform or pay, with the principal bound to repay the surety for any loss.

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