ERISA bonds were introduced under the Employee Retirement Income Security Act. The act was set up to protect those who invest in private employee retirement plans. Common examples are employer-sponsored 401(k) investment funds, individual retirement accounts (IRAs), and employer-sponsored pension plans. The ERISA regulations are meant to prevent financial loss to retirement investors as a result of industry fraud, abuse of power, and dishonesty. Those who are in charge of handling and managing private retirement investment funds must be bonded. The bond is insurance against any act of fraud or dishonesty. Financial institutions that manage retirement funds must take out bonds on employees directly overseeing those funds. Independent financial managers are required to purchase ERISA bonds on their own behalf.
The U.S. Treasury Department maintains a list of approved ERISA bond issuers. For example, those seeking ERISA bonds in Arizona cannot go out and purchase these types of bonds from anyone. Bond issuers that are on the Treasury Departments approved list are acceptable as long as the bonded individual or company does not have a significant financial interest tied to the bond agency. Each employee or individual involved in the handling of funds or property related to the retirement fund must be bonded under ERISA regulations.
Check out website name as a potential issuer of ERISA bonds in Arizona. Bond issuers can help employers and individuals choose the correct bond amounts and deductibles to meet the government’s requirements. More than one bond may need to be issued, depending on the number of employees involved in handling funds or property related to the retirement plan. Handling covers physically touching cash and checks related to the retirement plan, transferring funds from one party to another, having the authority to negotiate property transfers related to the fund, having the power to sign checks, distributing funds, and having the power to make decisions related to the fund.
Ensuring that you and your organization are meeting government regulations is a combination of reviewing internal organizational structures and practices, and consulting government publications. Any employee involved in the handling of funds or property related to private retirement investment accounts must be bonded at a value of at least ten percent of the retirement fund’s previous year’s value. While there are also bond limits set in place by the U.S. Treasury, employers can also choose to purchase bonds in excess of the minimum requirements.
