Propeller Bonds has transformed access to ERISA surety bonds, making it easier than ever to secure these critical financial safeguards. ERISA bonds, a specialized type of surety bond, are mandated by federal law to protect employee benefit plans from fraud, mismanagement, or dishonest acts by plan fiduciaries. Propeller provides a streamlined, hassle-free process for obtaining these essential bonds, ensuring plan administrators remain compliant with minimal effort. The Propeller Bonds platform offers a vast selection of over 7,000 Contract, Commercial, and Fidelity surety bonds. Agencies can customize the platform with their branding, allowing agents to procure bonds for clients or empower clients to purchase bonds directly. Agents earn commissions on all transactions completed through their exclusive site link. Propeller collaborates with top-tier, "A" rated carriers, guaranteeing dependable protection.

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What is an ERISA Surety Bond?

An ERISA Surety Bond is a type of surety bond required under the Employee Retirement Income Security Act (ERISA) to protect employee benefit plans from fraud, theft, or dishonesty by those who manage or handle plan funds. The bond ensures that plan fiduciaries—such as administrators or trustees—fulfill their financial responsibilities ethically and in compliance with federal regulations.

Specifically, the following parties need an ERISA bond:

Plan Fiduciaries – Anyone who has discretionary authority over the management or administration of an ERISA-covered employee benefit plan, such as trustees, plan administrators, and fund managers.

Individuals Handling Plan Funds – Anyone responsible for receiving, safeguarding, or disbursing plan assets, including those who sign checks, transfer funds, or have access to financial records.

Third-Party Administrators (TPAs) – If a third-party administrator has control over plan assets, they may also be required to obtain an ERISA bond.

How does an ERISA Bond work?

ERISA mandates that fiduciaries who oversee plan assets must be bonded for at least 10% of the plan’s total assets, with a minimum bond amount of $1,000 and a maximum of $500,000 (or $1 million for plans that hold employer securities).

If a fiduciary commits fraud or theft resulting in financial loss to the plan, the bond provides compensation to restore the funds.

The bond does not cover fiduciary errors or mismanagement—only intentional fraudulent or dishonest acts.

ERISA surety bonds are essential for ensuring the integrity of employee benefit plans, protecting plan participants, and maintaining compliance with federal law.

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Importance of having ERISA Bonds

ERISA Surety Bonds are important because they protect employee benefit plans from fraud, dishonesty, and financial misconduct by those who manage or handle plan assets. These bonds are a critical safeguard, ensuring the integrity of retirement and benefit plans while promoting compliance with federal regulations. Below are some key reasons why ERISA surety bonds matter.

Protection Against Fraud and Theft – The bond provides financial security by compensating the plan in case a fiduciary or handler misuses or steals plan funds, safeguarding employees’ retirement and benefit savings.

Legal Compliance – ERISA mandates that fiduciaries and handlers of plan assets be bonded for at least 10% of the plan’s assets to prevent financial losses due to fraudulent activity. Failure to secure a bond can lead to legal consequences and penalties.

Trust and Accountability – Requiring a bond ensures that those managing employee benefits act responsibly, reinforcing accountability and ethical financial management.

Risk Mitigation – By having a surety bond in place, companies reduce financial risk for both the employer and employees, ensuring that any wrongdoing does not jeopardize the security of the benefit plan.

Peace of Mind for Plan Participants – Employees rely on their retirement and benefit plans for future financial security. ERISA bonds help build confidence that their funds are being managed safely and in compliance with federal standards.

While ERISA surety bonds specifically cover fraudulent or dishonest acts, plan fiduciaries may also obtain fiduciary liability insurance for additional protection against errors, mismanagement, or breaches of fiduciary duty.

As your FREE bolt-on surety department, Propeller will streamline all of your surety bond needs, whether it’s Contract, Commercial or Fidelity bonding. We have access to over 7,000 bonds, including Contract Bonds (bid bonds, performance & payment bonds, and subdivision bonds). Propeller is licensed in all 50 states as well as the District of Columbia. We are actively partnering with thousands of agencies throughout the United States.