Beginning with the enactment of the Employee Retirement Income Security Act (ERISA) in 1974, fiduciaries assumed new responsibilities relating to the management and administration of employee benefit plans. Along with requiring the purchase of a fidelity bond to cover theft of plan assets, ERISA also mandated that fiduciaries may be personally liable for breach of certain responsibilities or duties imposed upon them under the law.
This particular plan is designed to protect the plan and its participants against fraud or dishonesty by the bonded trustee. The amount of the bond must be at least 10% of the plan assets. However, the bond must be at least $1,000 but does not need to be greater than $500,000 unless prescribed by the Secretary of Labor. ERISA requires each fiduciary or any other person who handles funds on behalf of the plan to carry adequate coverage.
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