What is an ERISA fidelity bond and how much coverage is required?
Last updated October 2, 2026
An ERISA fidelity bond insures the plan against losses from fraud or dishonesty by people handling plan funds. It's mandatory — at least 10% of funds handled, minimum $1,000 and generally capped at $500,000 per plan — and it is not the same as fiduciary liability insurance.
ERISA Section 412 requires every person who handles plan funds or property to be bonded. The bond protects the plan — not the fiduciaries — against theft, embezzlement, forgery, and similar dishonesty.
Coverage math: at least 10% of the funds handled during the prior year, with a $1,000 floor and a $500,000 ceiling per plan ($1 million where the plan holds employer securities). Plans whose only "funds" are fully-insured premiums paid from general assets may have limited bonding needs, but any plan handling participant contributions typically requires one.
Two habits keep this clean: confirm the bond amount annually against funds handled, and never confuse the bond with fiduciary liability insurance — DOL investigators check for the bond first because it's the one coverage the law actually mandates.
Thanks for your feedback!