The Employee Retirement Income Security Act of 1974 (ERISA)  is a federal statute governing standards for private pension plans, including vesting requirements, funding mechanisms, and plan design. An ERISA bond's primary purpose it so protect plan participants from misappropriation of funds by the plan trustee or administrators. 

If you are a business owner who has a 401(k) retirement plan for your employees, you are required to hold a fiduciary bond of at least 10% of the asset values. For instance, if you have a retirement plan with $500,000 in assets, you will need a bond for at least $50,000.

The good news is that these bonds are readily available and very affordable. The average cost runs approximately $125 for a 3 year term on a $10,000 bond which is typically plenty for a small business that is setting up their retirement plan. Most retirement plan advisers will recommend they contact their business insurance broker to add it to their coverage portfolio. 

Be sure that your bond includes an automatic rider that will extend to meet the 10% of asset requirement. As your plan grows, you need to be sure that your bond extends. 

BayRisk Insurance helps dozens of our clients with this simple bond. Please contact our office if you have any questions about ERISA or any other business insurance protection.