Michigan ERISA Stand-Alone Bond: Everything You Need to Know

If you manage an employee benefit plan in Michigan, understanding ERISA bonding requirements is essential to staying compliant with federal law. Many plan fiduciaries and administrators don’t realize they need an ERISA Stand-Alone Bond until they face potential legal or financial penalties.

At Axcess Surety, we specialize in providing ERISA Stand-Alone Bonds for businesses across Michigan and the U.S. We know that dealing with bonding requirements can seem overwhelming, but we make the process fast, easy, and affordable. This guide will walk you through everything you need to know about ERISA bonds, why they are required, and how to get one.

What Is a Michigan ERISA Stand-Alone Bond?

An ERISA (Employee Retirement Income Security Act) Stand-Alone Bond is a fidelity bond designed to protect employee benefit plans from losses caused by fraud or dishonesty by those handling plan assets.

Under ERISA Section 412, fiduciaries must be bonded for at least 10% of the plan’s total funds to ensure that employee benefits remain protected from potential theft, embezzlement, or fraudulent activities. The bond specifically covers acts like:

✔ Theft of plan assets
✔ Embezzlement or misappropriation
✔ Forgery or fraudulent transactions
✔ Wrongful conversion of funds

Unlike fiduciary liability insurance, which covers breaches of duty, an ERISA bond only covers intentional fraudulent acts.

Who Needs an ERISA Stand-Alone Bond in Michigan?

Most employee benefit plans require an ERISA bond, especially those that manage assets such as 401(k) plans, pension plans, and health savings accounts (HSAs). The following individuals and entities typically need an ERISA Stand-Alone Bond:

✅ Plan fiduciaries – Anyone with decision-making authority over plan assets
✅ Plan administrators – Those responsible for daily operations
✅ Trustees and investment managers – If they control financial transactions
✅ Businesses sponsoring retirement plans – Employers offering benefits like 401(k) or pension plans

Some exceptions exist, such as fully insured plans (where benefits are paid by an insurance company and there’s no direct handling of assets). However, if your plan involves investments, contributions, or financial transactions, an ERISA bond is likely required.

Why Is an ERISA Stand-Alone Bond Required?

The Department of Labor (DOL) enforces ERISA’s bonding requirements to protect employees’ retirement and benefit funds. Without a bond, businesses and fiduciaries expose themselves to serious risks, including:

🔴 Financial liability – If an employee benefit plan suffers a loss due to theft or fraud, the fiduciary could be held personally liable.
🔴 Regulatory penalties – The DOL may impose fines or take legal action against non-compliant plans.
🔴 Plan disqualification – The IRS could revoke the plan’s tax benefits, impacting both the employer and employees.

From our experience, businesses often underestimate the importance of an ERISA bond until they face compliance issues. Ensuring that your plan is properly bonded from the start prevents legal headaches and protects employees' hard-earned benefits.

How Much ERISA Bond Coverage Do You Need?

The required bond amount depends on the total assets in the benefit plan:

🔹 Minimum Coverage – The bond must be at least 10% of plan assets.
🔹 Maximum Coverage – The bond is typically capped at $500,000 per plan or $1,000,000 for plans holding employer securities.
🔹 Higher Coverage – If a fiduciary has greater control over assets, a higher bond may be recommended.

📌 Example: If your employee benefit plan holds $2,000,000 in assets, you must secure a bond of at least $200,000 (10%).

We’ve found that some plans fail compliance checks because their bond amount is too low. Reviewing your plan’s total assets annually ensures your coverage meets legal requirements.

How to Obtain a Michigan ERISA Stand-Alone Bond

Getting an ERISA bond is simple when working with a trusted surety provider. Here’s how the process works:

Step 1: Determine the Required Bond Amount

Calculate 10% of your plan’s total assets to determine the minimum bond coverage required.

Step 2: Complete a Quick Application

Most ERISA bonds don’t require a credit check or financial review. We offer a fast, online application that takes just minutes to complete.

Step 3: Get Approved and Issued

Many ERISA bonds are issued instantly or within 24 hours.

Step 4: Receive Your Bond Certificate

Your bond certificate will be sent electronically for easy filing with the Department of Labor.

From what we’ve seen, many businesses assume getting bonded is complicated, but the process is actually straightforward when you work with an experienced surety provider.

Common Mistakes to Avoid with ERISA Bonds

In our dealings with businesses and fiduciaries, we’ve encountered several common ERISA bonding mistakes that can lead to compliance issues:

❌ Not having a bond at all – Many fiduciaries assume they don’t need an ERISA bond, only to face DOL penalties later.
❌ Underinsuring the plan – Failing to meet the 10% minimum coverage requirement can result in non-compliance.
❌ Confusing ERISA bonds with fiduciary liability insurance – These are not the same; an ERISA bond covers fraud, while fiduciary insurance covers negligence.
❌ Waiting too long to renew – ERISA bonds must be renewed to remain compliant.

Avoiding these mistakes saves time, money, and legal trouble in the long run.

Why Choose Axcess Surety for Your ERISA Bond?

We understand that businesses want a fast, affordable, and hassle-free bonding experience. Here’s why Axcess Surety is the best choice for your Michigan ERISA Stand-Alone Bond:

✔ Quick Approvals – Many bonds issued same-day
✔ No Credit Check – Most ERISA bonds don’t require a financial review
✔ Competitive Pricing – We work with top surety providers for the best rates
✔ Expert Support – We specialize in ERISA compliance and bonding solutions
✔ Nationwide Coverage – We provide ERISA bonds in Michigan and all 50 states

Frequently Asked Questions (FAQs)

1. Can I use fiduciary liability insurance instead of an ERISA bond?

No. Fiduciary liability insurance covers breaches of duty, while an ERISA bond protects against fraud and dishonesty. ERISA bonds are mandatory, while fiduciary liability insurance is optional.

2. Do all employee benefit plans need an ERISA bond?

Most do, but some exceptions exist. Plans fully insured by an insurance company may be exempt. However, if your plan handles contributions or investments, a bond is required.

3. How long does it take to get an ERISA bond?

With us, most ERISA bonds are issued instantly or within 24 hours.

4. How much does an ERISA bond cost?

Bond premiums are typically affordable and based on the bond amount. Most small business ERISA bonds cost between $100-$500 per year.

Get Your Michigan ERISA Stand-Alone Bond Today!

If you need an ERISA Stand-Alone Bond in Michigan, we’re here to help. With fast approvals, competitive rates, and expert support, we make getting bonded easy.

📞 Call us today or apply online now to get started!