Facts Surrounding ERISA Fidelity Bond Requirements for 401(k) Plans

  • A fidelity bond is required for every fiduciary or individual of a 401(k) plan who handles the assets of the 401(k) plan.
  • The bond protects the 401(k) plan from loss stemming from fraud and dishonest acts by the 401k plan fiduciary or other plan officials.
  • The minimum fidelity bond coverage amount is $1,000 or 10 percent of 401(k) plan assets up to a maximum of $50,000.

IMPORTANT: However, the maximum required fidelity bond amount jumps to $1 million for 401(k) plans that invest in employer securities. Therefore, those that use their 401k to fund (ROBS) their own business through the issuance of stock shares would fall under this $1 million requirement.

  • The 401(k) is named as the insured not the employer.
  • Small 401(k) plans (e.g., Solo 401k plan) covering only the owner and his or her spouse or partners and spouses is not subject to the fidelity bond coverage requirement.
  • The Department of Labor (DOL) published Assistance Bulletin No. 2008-04 (FAB2008-04) containing frequently asked questions surrounding ERISA fidelity bonding requirements.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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