The Setting Every Community Up for Retirement Plan Enhancement (SECURE) Act of 2019 took effect on the 1st January, 2021, which addressed pooled employer plans (PEPs). This plan architecture, like other retirement, pension and defined benefit plans are NOT excluded from the ERISA fidelity bond requirements. Per the U.S. Department of Labor, "The Employee Retirement Income Security Act (ERISA) sets rules and standards of conduct for private sector employee benefit plans and those that invest and manage their assets. The provisions of ERISA were enacted to address concerns that funds of private pension and other employee benefit plans were being handled inappropriately. One of ERISA’s requirements is that people who handle plan funds and other property must be covered by an ERISA bond to protect the plan from losses due to fraudulent acts or dishonest conduct of plan fiduciaries (handlers)."
The Department of Labor has specifically addressed PEPs in Information Letter 09-07-2022. It advises that, "ERISA section 3(44)(A)(iv) provides that the pooled plan provider of a PEP is responsible for ensuring that “all persons who handle assets of, or who are fiduciaries of, the PEP are bonded in accordance with Section 412 of ERISA. The SECURE Act modified section 412 to confirm that the bonding requirements of that section apply to PEPs, except that the $1,000,000 is the maximum ERISA fidelity bond amount rather than $500,000 for those plans that do not hold employer securities." The DoL slightly expands the trustee definition here. "Plan officials" may also include other persons, such as service providers, whose duties and functions involve access to plan funds or decision-making authority that can give rise to a risk of loss through fraud or dishonesty.”
Our ERISA bond model conforms to and has been approved by the D.o.L. for PEPs. The following are required for quoting the PEP-specific fidelity bond requirement.
- Non-standard ERISA Fidelity Bond application.
- Current plan financial statement.
- Current Form 5500.
RETRO-DATING OF ERISA BOND COVERAGE
Surety companies are generally not willing to backdate fidelity bonds because it would require that the insurer assume potential liabilities without the benefit of previous underwriting and receipt of premium. We can backdate beyond the thirty-day window however additional application requirements apply AND further documents will be needed. Email Underwriting@SuretyOne.com, call (800) 373-2804 or click here for a live chat about this specific need.
ERISA FIDELITY BONDS FOR FINANCIAL ADVISERS
Standard ERISA bonds do not offer coverage for independent registered investment advisers (RIAs). We offer a specialty product for RIAs that has been approved by the U.S. Department of Labor and complies with the requirements of ERISA:
RIA ERISA-compliant bond application.
This fidelity bond offers the following benefits:
- Specialty coverage designed to support SEC and state registered financial advisers' ERISA-specific exposures and compliance issues.
- May be issued to cover a single plan or offered as a blanket coverage for all plans that the RIA advises.
- High aggregate limits available.
- Policy form includes an "inflation guard" provision at no extra premium or fee.
Read more about this product here.
*Your plan or investment advisory firm may benefit from fiduciary liability coverage. Contact us for more information on this product.
Surety bond application review and quoting are free of charge. There is no obligation to purchase.