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

If you manage an employee benefit plan in Michigan, you may need an ERISA Stand-Alone Bond to comply with federal regulations. The Employee Retirement Income Security Act (ERISA) requires fiduciaries of benefit plans to secure a bond that protects participants from potential fraud or mismanagement.

From my experience, I’ve found that many plan administrators are unaware of ERISA bonding requirements until they face an audit or compliance check. To avoid penalties and ensure your plan remains in good standing, it’s important to understand what an ERISA Stand-Alone Bond is, why it’s required, and how to obtain one.

What Is a Michigan ERISA Stand-Alone Bond?

An ERISA Stand-Alone Bond is a type of fidelity bond required for fiduciaries who handle employee benefit plans. This bond is specifically designed to protect plan participants and beneficiaries from losses caused by fraud, theft, embezzlement, or dishonesty by those managing the funds.

ERISA requires that every fiduciary handling plan funds or property must be bonded for at least 10% of the plan’s assets, with a minimum of $1,000 and a maximum of $500,000 per plan. However, plans that hold employer securities must carry a higher bond limit—up to $1,000,000.

Why Is an ERISA Stand-Alone Bond Required?

In my professional life, I’ve had firsthand experience helping businesses navigate ERISA compliance, and I’ve come to recognize why this bond is essential:

✔ Protects Employee Benefits – Ensures that retirement, pension, and welfare plans are safe from fraud and dishonest acts.
✔ Ensures Federal Compliance – ERISA requires all fiduciaries to secure a bond or risk penalties from the U.S. Department of Labor (DOL).
✔ Avoids Legal Risks – Failure to obtain an ERISA bond can lead to fines, investigations, and personal liability for plan fiduciaries.
✔ Builds Trust – Employees feel more secure knowing their retirement and benefit funds are protected.

Who Needs a Michigan ERISA Stand-Alone Bond?

ERISA bonding requirements apply to anyone who handles plan funds or assets, which can include:

✅ Plan Administrators – Those responsible for overseeing an employee benefit plan.
✅ Trustees and Officers – Individuals with authority over plan assets or investments.
✅ Third-Party Administrators (TPAs) – Companies or professionals managing funds on behalf of the plan sponsor.
✅ Employees Handling Funds – Staff members who process transactions, issue payments, or manage contributions.

If you or your company receive, disburse, or have access to plan funds, ERISA likely requires you to be bonded.

How Much ERISA Bond Coverage Is Required?

The amount of ERISA bonding required is based on the total assets of the employee benefit plan:

🔹 Minimum Bond Amount: $1,000
🔹 Required Coverage: At least 10% of the plan’s assets
🔹 Maximum Bond Limit: $500,000 (or $1,000,000 for plans holding employer securities)

Example Bond Coverage Requirements:

Plan Assets

Minimum Bond Required

$50,000

$5,000

$250,000

$25,000

$1,000,000

$100,000

$5,000,000

$500,000

$10,000,000 (Employer Securities)

$1,000,000

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

The cost of an ERISA Stand-Alone Bond is based on the bond amount and the risk level of the plan. Unlike other bonds, no credit check is required, making it easy and affordable to obtain.

Typical ERISA Bond Premiums:

✔ $10,000 bond: $100 – $150 per year
✔ $100,000 bond: $250 – $500 per year
✔ $500,000 bond: $750 – $1,500 per year

From my observation, most small to mid-sized companies can secure an ERISA bond for under $500 per year. Since there’s no underwriting or financial review, the process is quick and hassle-free.

How to Obtain a Michigan ERISA Stand-Alone Bond

Getting an ERISA bond is a fast and straightforward process. Here’s what I recommend:

Step 1: Determine Your Required Bond Amount

Check your plan’s most recent financial statements to calculate 10% of total plan assets.

Step 2: Apply Online

Most ERISA bonds can be issued instantly without a credit check or financial review. Simply provide:
✔ Plan name and administrator details
✔ Plan asset value
✔ Required bond amount

Step 3: Pay for the Bond

Once you receive a quote, pay the premium to activate the bond.

Step 4: Receive Your Bond Certificate

The bond is typically issued within minutes and sent to you via email.

Step 5: File the Bond

Keep the bond on record with your plan’s documents in case of a compliance review by the Department of Labor.

Common ERISA Compliance Mistakes to Avoid

I’ve often seen businesses make simple but costly mistakes when dealing with ERISA compliance. Here are a few to watch out for:

❌ Not Obtaining a Bond – Operating a benefit plan without an ERISA bond can lead to penalties from the DOL.
❌ Underinsuring the Plan – Failing to meet the 10% coverage requirement can result in compliance issues.
❌ Assuming the Bond Covers All Liabilities – ERISA bonds only protect against fraud and dishonesty, not mismanagement or poor investment decisions.
❌ Not Renewing the Bond – ERISA bonds must be renewed annually to maintain compliance.

Frequently Asked Questions

1. Can I get an ERISA Stand-Alone Bond with bad credit?

Yes! ERISA bonds do not require a credit check, so anyone can get approved.

2. What happens if my company does not have an ERISA bond?

Failure to secure a bond can result in fines, DOL investigations, and personal liability for fiduciaries.

3. Does an ERISA bond cover all types of fiduciary misconduct?

No, the bond only covers fraud and dishonesty. It does not protect against poor investment decisions or administrative errors.

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

In most cases, an ERISA bond can be issued within minutes.

How We Can Help

We’ve helped hundreds of businesses in Michigan secure ERISA Stand-Alone Bonds quickly and affordably. Whether you manage a 401(k), pension, or employee health plan, we can find the right bond for you.

✔ Instant approvals – Get bonded in minutes.
✔ No credit check required – Anyone can qualify.
✔ Affordable rates – Competitive pricing for all plans.
✔ Expert support – Guidance from experienced bonding professionals.

📞 Need an ERISA Stand-Alone Bond? Contact us today! 🚀