Georgia ERISA Stand-Alone Bond: What You Need to Know

If you manage an employee benefit plan covered by the Employee Retirement Income Security Act of 1974 (ERISA), obtaining an ERISA Stand-Alone Bond in Georgia is a critical step in ensuring compliance with federal requirements. This bond protects plan participants and beneficiaries from financial losses due to dishonest or fraudulent acts by plan fiduciaries.

What is an ERISA Bond?

An ERISA bond is a type of fidelity bond required under federal law for anyone who handles funds or property of an employee benefit plan. It specifically insures the plan against losses caused by acts like theft, embezzlement, or fraud.

A Stand-Alone ERISA Bond is distinct because it is issued solely for ERISA compliance, separate from other business insurance policies.

Why Do You Need an ERISA Bond in Georgia?

From my perspective, ERISA compliance is vital for protecting the financial integrity of employee benefit plans and building trust with employees. Here are the primary reasons:

• Legal Requirement: Federal law mandates that plan fiduciaries must be bonded for at least 10% of the plan assets they handle, with a minimum of $1,000 and a maximum of $500,000 (or $1 million for plans with employer securities).

• Risk Management: Protects the plan and its participants from fiduciary misconduct.

• Plan Integrity: Demonstrates your commitment to safeguarding employee benefits.

How Does the ERISA Stand-Alone Bond Work?

1. Plan Fiduciary: The person handling plan assets must secure the bond.

2. Coverage: The bond must cover at least 10% of the plan’s total assets, calculated based on the highest value of assets during the year.

3. Claims Process: If a covered loss occurs due to fraudulent or dishonest acts, the bond compensates the plan up to the bond amount.