--- title: "ERISA Bond Exemptions: Who Does Not Need One" description: "The real ERISA bonding exemptions: owner-only plans outside Title I, banks and insurers, registered broker-dealers, and unfunded plans paid from general assets." canonical: https://americassuretybonds.com/requirements/erisa/exemptions/ author: "Phil Pavarini, Insurance Agent" publisher: "America's Surety Bonds" date_published: 2026-10-03 date_modified: 2026-10-03 language: en-US --- [Home](https://americassuretybonds.com/) > [Requirements](https://americassuretybonds.com/requirements/) > [ERISA Bond](https://americassuretybonds.com/requirements/erisa/) > Who is exempt # Who genuinely does not need an ERISA bond *Four real exemptions, and a much longer list of things people wrongly believe are exemptions.* By Phil Pavarini, Insurance Agent. > Phil Pavarini is a licensed insurance producer and is compensated when a bond is placed through this site. This page is general information, not legal, tax or fiduciary advice, and it is not a substitute for reading your plan document or contract or for advice from your own counsel. Figures shown are current as of the date on this page. There are exemptions, they are narrow, and they are widely misunderstood. Two of them come from the statute, one from a regulation about who is covered by ERISA at all, and one from the nature of the plan. Being small is not one of them. Being new is not one of them. Having a big-name recordkeeper is not one of them. ## 1. Plans outside Title I, which is the solo 401(k) answer This is the exemption that actually applies to most people asking. Section 412 only reaches plans covered by Title I of ERISA. A plan that is not covered by Title I has no bonding requirement, because the statute never reaches it. 29 CFR 2510.3-3 is the rule. A plan is outside Title I when **no employees are participants**. And for this purpose, an individual and their spouse are **not employees** with respect to a trade or business wholly owned by that individual or by the individual and spouse. Partners and their spouses are likewise not employees with respect to the partnership. So: a solo 401(k) covering only the owner, or the owner and spouse, is outside Title I and needs no bond. Same for a partner-only plan. **The trap.** This is a status that can change without anybody noticing. The day a common law employee becomes a participant, the plan is inside Title I, and the bond is required from that point. The most common version is a growing business whose first employee satisfies the eligibility period eighteen months after being hired, by which time nobody is thinking about the plan document. ## 2. Banks, insurance companies and similar institutions The statute exempts a corporation that is authorized to exercise trust powers or to conduct an insurance business, that is subject to supervision or examination by federal or state authority, and that meets a capital and surplus test. The statutory floor is $1,000,000, and the exemption is at 29 U.S.C. 1112(a). This is an exemption for the institution, not for the plan. A regulated bank trustee does not need to be bonded. The sponsor’s own officers and employees who handle plan funds still do. ## 3. Registered broker-dealers A broker or dealer registered under the Securities Exchange Act of 1934 is exempt where it is subject to the fidelity bond requirements of a self-regulatory organization. FINRA Rule 4360 is the usual source of that requirement. Same limit as above. The exemption covers the broker-dealer, not everybody else connected to the plan. ## 4. Plans paid entirely from general assets A plan under which benefits are paid only out of the general assets of a union or an employer is exempt, because there is no separate fund to steal from. This covers a genuinely unfunded plan, and the word doing the work is "only." If the arrangement has a trust, a segregated account, or a rabbi trust with plan assets in it, the exemption is gone. ## Things that are not exemptions, however often they are treated as one - **A small plan.** There is no small plan exemption. The $1,000 floor exists precisely because small plans are in scope. - **A participant-directed plan.** Participants directing their own investments does not stop anyone at the sponsor from handling funds. - **A large recordkeeper.** Their bond covers them. It does not cover your people. - **A fiduciary liability policy.** Different product, different peril, does not satisfy section 412. [The difference, in detail](/requirements/erisa/vs-fiduciary-liability/) - **A new plan with no assets yet.** Funds will be handled in the first year. Estimate and bond. - **A frozen or terminating plan.** As long as there are assets and someone handling them, the requirement stands. It ends when the plan does. Know the amount you need? [Apply for this bond](https://americassuretybonds.propeller.insure/axelerator-public/) or read the [full bond details](https://americassuretybonds.com/state/All-States/ERISA-Policy/All-OTHER-states). Related: [How much bond](https://americassuretybonds.com/requirements/erisa/bond-amount/), [Who must be bonded](https://americassuretybonds.com/requirements/erisa/who-must-be-bonded/), [401(k) plans](https://americassuretybonds.com/requirements/erisa/401k/), [No deductible](https://americassuretybonds.com/requirements/erisa/no-deductible/), [What it costs](https://americassuretybonds.com/requirements/erisa/cost/), [How to get one](https://americassuretybonds.com/requirements/erisa/how-to-buy/), [Form 5500](https://americassuretybonds.com/requirements/erisa/form-5500-line-4e/), [Non-qualifying assets](https://americassuretybonds.com/requirements/erisa/non-qualifying-assets/), [Bond vs fiduciary liability](https://americassuretybonds.com/requirements/erisa/vs-fiduciary-liability/), [By state](https://americassuretybonds.com/requirements/erisa/by-state/). ## Common questions **Does a solo 401(k) need an ERISA fidelity bond?** Generally no. A plan covering only the business owner, or the owner and their spouse, is not covered by Title I of ERISA under 29 CFR 2510.3-3, and section 412 does not reach it. The moment a common law employee becomes a participant, the plan is covered and the bond is required. **We only have part-time employees in the plan. Are we exempt?** No. The Title I question is whether any common law employee participates, not how many hours they work. A part-time employee who is a participant puts the plan inside Title I and triggers the bonding requirement. **Our plan is frozen. Do we still need the bond?** Yes, while there are assets and people handling them. A frozen plan has stopped accruing benefits, but it still holds money and still makes distributions, and those are the activities the bond exists to cover. The requirement ends when the plan is fully terminated and distributed. **The plan has a corporate trustee at a bank. Does that exempt us?** It exempts the bank, not you. The statutory exemption for regulated institutions with trust powers applies to that institution. Any officer or employee of the sponsor who handles plan funds, including anyone who approves distributions or signs on the plan account, still needs to be covered. **Does a 403(b) plan need an ERISA bond?** It depends on whether the 403(b) is covered by Title I. A governmental or church plan generally is not, and needs no bond. A 403(b) sponsored by a private tax-exempt employer with meaningful employer involvement generally is covered, and does need one. The safe harbor rules on employer involvement are where this question actually gets decided, and it is worth confirming the plan’s status with the TPA rather than assuming. ## Related guides - [ERISA Bond](https://americassuretybonds.com/requirements/erisa/) - [Who must be bonded](https://americassuretybonds.com/requirements/erisa/who-must-be-bonded/) - [401(k) plans](https://americassuretybonds.com/requirements/erisa/401k/) - [Form 5500](https://americassuretybonds.com/requirements/erisa/form-5500-line-4e/) --- **Phil Pavarini, Insurance Agent.** Licensed insurance producer (NPN 8314541, CA License No. 4481016), licensed in 49 states and the District of Columbia. Has placed probate, fiduciary, court, contractor and commercial surety since 2004, and writes about the bonds he actually files. This website is a referral and informational platform. It is not a surety, an insurer, a bonding company, or a law firm. Bond inquiries may be referred to a licensed agency, agent or carrier for quoting, underwriting and issuance. If you already have a bond, the agent of record and the issuing surety are identified on your bond form, power of attorney, or invoice. Please direct all questions about an existing bond to that party. Content on this site is general information only and is not legal, tax or financial advice. Bond requirements vary by jurisdiction and change frequently. Verify all requirements with the applicable court, agency or obligee. HTML version: https://americassuretybonds.com/requirements/erisa/exemptions/