Why Is an ERISA Bond Required?

From my experience, the ERISA Stand-Alone Bond is essential for ensuring the security of employee benefit plan assets. The bond:

• Ensures Fiduciary Accountability – Holds fiduciaries responsible for managing plan assets honestly and lawfully.

• Protects Plan Participants – Provides financial recourse if a fiduciary commits theft, embezzlement, or fraud.

• Complies with Federal Law – ERISA mandates that fiduciaries maintain bonding to safeguard plan participants’ benefits.

Without this bond, employers or fiduciaries cannot legally manage employee benefit plans.

Who Needs a Kansas ERISA Stand-Alone Bond?

This bond is required for:

• Fiduciaries of Employee Benefit Plans – Individuals or organizations managing assets for employee benefit plans, including 401(k)s, pensions, and health plans.

• Employers Offering Benefit Plans – Companies sponsoring plans that involve employee contributions or employer-funded benefits.

• Third-Party Administrators (TPAs) – Firms responsible for managing employee plan assets on behalf of employers.

If you have fiduciary responsibilities tied to an employee benefit plan in Kansas, you are likely required to secure an ERISA bond.

How Much Does a Kansas ERISA Stand-Alone Bond Cost?

The bond amount required is based on the value of the plan’s assets, as specified by ERISA. The minimum bond amount is 10% of the total plan assets, with a minimum bond value of $1,000 and a maximum of $500,000 (or $1,000,000 for plans holding employer securities).

Typical Bond Costs (Premiums):

• 1% to 3% of the bond amount annually.

  • For example:

    • A $50,000 bond may cost $500 to $1,500 annually.

    • A $100,000 bond may cost $1,000 to $3,000 annually.

Factors That Affect Bond Costs:

1. Plan Size – Larger plans with higher asset values require larger bond amounts.

2. Business Creditworthiness – Companies with better credit typically pay lower premiums.

3. Bond Term – Single-year terms are common, but multi-year terms may be available at discounted rates.

How to Get a Kansas ERISA Stand-Alone Bond

Securing this bond is simple when you follow these steps:

1. Determine the Required Bond Amount
   Calculate 10% of the total plan assets or verify the amount with your plan administrator.

2. Apply for the Bond
   Submit an application with your business and plan details, including the value of plan assets.

3. Receive a Quote
   The bond premium will be calculated based on the bond amount and your credit profile.

4. Purchase the Bond
   Once approved, pay the premium, and receive your bond certificate.

5. File the Bond
   Submit the bond to your plan administrator or the appropriate regulatory body as proof of compliance.