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ERISA Fidelity Bonding

Generally, every fiduciary (anyone who has some discretionary authority or control over the plan or its assets), and anyone who handles funds or other property of the plan, must be bonded. The bond must cover 10% of the plan assets as of the beginning of the plan year. It may not be for less than $1,000 and need not be for more than $500,000.

The term funds or other property is intended to encompass all property that is or may be used as a source for the payment of benefits to plan participants. It includes cash, checks, negotiable instruments and property that is readily convertible into cash for distribution of benefits.

A person handles funds or property of a qualified retirement plan whenever that person's duties or activities are such that there is risk that the funds or other property could be lost if that person acting alone or with others, engaged in dishonest or fraudulent conduct. Handling is generally considered to include situations in which there is:

      1.         Physical contact with cash, checks, or property;

      2.         The power to secure physical possession of the cash, checks, or similar property;

      3.         The authority to cause a transfer of property such as mortgage or securities to oneself or another; or

      4.         Disbursement of funds or other property including the power to sign or endorse checks.

Bonding is available through your business insurance carrier. You may also obtain bonding information from Colonial Surety (not affiliated with Davis Moore & Assoc., Inc.) at Colonial Surety.