Alaska Bond - ERISA Policy in Alaska

Brief Summary

Every Alaska employer or plan sponsor whose retirement or welfare plan holds assets needs an ERISA fidelity bond covering each person who handles plan money. The amount is 10 percent of the funds handled, with a $1,000 floor and a $500,000 cap per plan, the plan itself may pay the premium, and a fiduciary liability policy does not take its place.

Section 412 of ERISA, codified at 29 U.S.C. 1112, requires every fiduciary and every person who handles funds or other property of a covered employee benefit plan to be bonded. The bond must equal at least 10 percent of the funds handled, never less than $1,000 and no more than $500,000 per plan, or $1,000,000 for plans holding employer securities. The rule is federal, so it applies to a plan sponsored in Alaska the same way it applies anywhere else in the country.

We can help with all Alaska bonds!

How to Apply for a Alaska Bond:

• Plan name exactly as it appears on the plan document.
• The value of plan funds handled during the preceding plan year.
• Whether the plan holds employer securities or is a pooled employer plan, which raises the cap to $1,000,000.
• Names or positions of the trustees, officers and employees who handle plan funds.
• Plan sponsor details for underwriting.
• Put the bond in force at the start of the plan year and recheck the amount each year as assets change.

Detailed Information About the Alaska Alaska Bond:

Setting the amount

The bond amount is fixed at the beginning of each plan year, based on the highest amount of funds handled in the preceding year. Each person who handles plan funds must be covered for at least 10 percent of what he or she handled, with a minimum of $1,000 and a maximum of $500,000 per plan. Plans that hold employer securities, and pooled employer plans, carry a $1,000,000 cap instead. One bond can cover several plans, but each plan must be covered as if it were bonded separately. Handling is broader than touching the money. Anyone with power to transfer funds or authority to disburse them counts.

Who is exempt

Plans that are completely unfunded, paying benefits only from the general assets of the employer or union, do not need a bond. Neither do plans outside Title I of ERISA, which includes governmental plans and church plans that have not elected ERISA coverage. Registered broker-dealers subject to the fidelity bond rules of a self-regulatory organization, and certain federally or state supervised banks and insurance companies that meet capital and surplus minimums, are also exempt from the bonding rule.

Rules plan sponsors get wrong

Fiduciary liability insurance is a different product. It covers breaches of fiduciary duty, is neither required by nor subject to section 412, and does not satisfy the bond. The bond must cover the plan from the first dollar of loss, so it cannot have a deductible. The plan must be named or identified on the bond so it can make a claim, and the plan must have one year after the bond ends to discover losses that happened while it was in force. The surety must appear on the Treasury Department's Circular 570 list of approved sureties, and neither the plan nor a party in interest may control or hold a significant financial interest in it. The plan may pay the premium from plan assets.

Eligibility and Requirements for a Alaska Alaska Bond:

• Coverage of at least 10 percent of funds handled, minimum $1,000, maximum $500,000 per plan.
• A surety listed on Treasury Department Circular 570.
• No deductible. Coverage starts at the first dollar of loss.
• The plan named or otherwise identified as the insured.
• A one year discovery period after the bond ends.

Alaska Alaska Bond FAQs:

Official and Additional Resources for the Alaska Alaska Bond: