When your company offers employee benefits like a 401(k), profit-sharing, or stock plan, you’re managing more than compensation, you’re managing trust. Employees rely on those plans to secure their futures, and federal law holds employers accountable for protecting that money.

That’s where ERISA bonds come in. An ERISA bond is a federally required safeguard designed to protect benefit plan assets from theft or fraud.

But many companies confuse ERISA bonds with Fiduciary Liability Insurance, which serves a very different purpose. While both are forms of protection for companies offering benefits, they cover entirely different types of risk.

Here’s what every startup and SMB leader should know about ERISA bonds: what they are, who needs them, and how they differ from Fiduciary Liability Insurance.

What Is an ERISA Bond?

An ERISA bond (also called an ERISA fidelity bond) is a type of insurance required by the Employee Retirement Income Security Act (ERISA) for anyone who handles employee benefit plan funds.

It’s designed to reimburse the plan, not the employer, if those funds are stolen, embezzled, or otherwise misused by someone with access to them.

The rule comes from Section 412 of ERISA, which requires every person who handles plan funds to be bonded for at least 10% of the assets they control, with a minimum of $1,000 and a maximum of $500,000 per plan (or $1 million if the plan holds employer stock).

Common plans that require ERISA bonds include:

• 401(k) and profit-sharing plans
• Pension or defined benefit plans
• Employee stock ownership plans (ESOPs)

The bond must be issued by an insurance company or surety approved by the U.S. Department of the Treasury, and it must name the plan, not the employer, as the insured party.

What Does an ERISA Bond Cover?

ERISA bonds protect employee benefit plans from losses caused by dishonest acts, including:

• Theft or embezzlement of plan funds
• Forgery or alteration of checks and payment orders
• Misappropriation of contributions or plan assets
• Fraudulent withdrawals or disbursements

They don’t cover:

• Administrative mistakes (like missed enrollments or miscalculations)
• Poor investment decisions
• Communication errors about benefits
• Regulatory or legal defense costs

Those exposures can be covered by Fiduciary Liability Insurance, which complements an ERISA bond rather than replacing it.

Who Needs an ERISA Bond

Any person who handles plan assets needs to be bonded under federal law. That includes individuals who:

• Have access to plan funds or property
• Sign checks or authorize payments
• Manage or transfer plan assets
• Supervise employees who perform those functions

Most private-sector employers offering retirement or benefit plans fall under this requirement but some plans are exempt, including:

• Government and church plans
• Certain fully insured welfare plans (where no employee funds are held by the employer)

Even if your company uses a third-party administrator (TPA) or payroll provider, you may still need an ERISA bond if your team has any direct access to plan assets. The Department of Labor (DOL) holds the plan sponsor, not the vendor, responsible for ensuring the bond is in place.

How to Get an ERISA Bond

The process is straightforward, but it’s often overlooked, especially by smaller businesses.

1. Determine who handles plan funds. Identify employees or officers with access to plan assets.
2. Calculate the required bond amount. It must equal at least 10% of plan assets handled (up to $500,000, or $1 million for plans with employer securities).
3. Choose a Treasury-approved provider. ERISA bonds must be issued by a surety listed on the U.S. Department of the Treasury’s Circular 570.
4. Name the plan as the insured. The bond must protect the plan, not the employer.
5. Renew annually. Review and adjust your bond when plan assets grow.

ERISA Bond vs. Fiduciary Liability Insurance

Though they both protect employee benefit plans, ERISA bonds and Fiduciary Liability Insurance cover different risks.

In short, ERISA bonds protect the money and Fiduciary Liability Insurance protects the people managing it.

Florida ERISA Bond Requirements

ERISA is a federal law, meaning ERISA bond requirements are the same across all states. But Florida has some state-level nuances employers should know:

• Bond providers must be licensed in Florida. The surety company issuing the bond must hold an active license from the Florida Department of Financial Services (DFS).
• The provider must also appear on the U.S. Treasury’s approved list (Circular 570). This ensures the bond meets federal standards.
• Florida-based plan sponsors remain responsible for compliance. Even if your third-party administrator is out of state, the DOL holds the employer accountable for securing the bond.
• Renewal requirements apply annually. Florida employers must maintain an active bond and update the amount if plan assets increase.

Florida employers can purchase ERISA bonds through licensed insurance brokers, often alongside other business or management liability coverage, ensuring both compliance and continuity under one provider.

Common Compliance Mistakes to Avoid

Even well-intentioned companies sometimes miss ERISA bond requirements. The most frequent mistakes include:

• Not having an ERISA bond at all
• Naming the employer, rather than the plan, as the insured party
• Buying a bond for too low a limit as plan assets grow
• Assuming Fiduciary Liability Insurance satisfies the ERISA bond requirement (it doesn’t)
• Failing to renew the bond each year

If the Department of Labor audits your plan and finds that no bond is in place, your company could face penalties or delays in closing the audit.

ERISA bonds are a legal requirement designed to protect employees and their savings. But they’re also only half the picture.

An ERISA bond guards the plan’s funds against theft and fraud. Fiduciary Liability Insurance protects your company and leadership from the financial fallout of errors, omissions, and regulatory investigations.

Together, they create the foundation for a secure, compliant benefits program that protects both your people and your business.

Frequently Asked Questions

Is an ERISA bond the same as Fiduciary Liability Insurance?

No. ERISA bonds protect plan assets from theft or fraud, while Fiduciary Liability Insurance covers errors, mismanagement, and breach of fiduciary duty.

Who is required to carry an ERISA bond?

Anyone who handles employee benefit plan assets, including plan administrators, HR staff, and executives with access to plan funds.

How much coverage is required for an ERISA bond?

At least 10% of plan assets handled, with a minimum of $1,000 and a maximum of $500,000 (or $1 million for plans with employer stock).

Do I need an ERISA bond if I already have Fiduciary Liability Insurance?

Fiduciary coverage is optional and broader in scope, but it does not fulfill the ERISA bond requirement.

What are the ERISA bond rules in Florida?

The same federal rules apply, but the bond must be issued by a Treasury-approved surety licensed in Florida. Employers should verify their provider’s credentials through the Florida Department of Financial Services.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.