How much ERISA fidelity bond coverage does a retirement plan need?
Last updated October 2, 2026
Everyone who handles plan funds must be bonded for at least 10% of funds handled — minimum $1,000, capped at $500,000 per plan, or $1,000,000 for plans holding employer securities. The bond protects the plan against dishonesty and is legally required, unlike fiduciary insurance.
ERISA Section 412's bonding rule is one of the few bright-line requirements in fiduciary law: no one may handle plan funds without a fidelity bond covering at least 10% of the funds they handled in the prior year — floor $1,000, ceiling $500,000 per plan (raised to $1,000,000 when the plan holds employer securities).
Details that trip sponsors up:
- The bond names the plan as insured and covers fraud and dishonesty — theft, embezzlement, forgery — by anyone handling funds.
- Form 5500 asks for the bond amount, so gaps are self-reported to regulators annually.
- As plan assets grow, a once-adequate bond quietly falls below 10% — verify the math every year.
And the perennial clarification: the bond protects the plan; only fiduciary liability insurance protects the people running it.
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