What You Must Know About ERISA Bonds

ERISA is the acronym for Employee Retirement Income Security Act, enacted in 1974. The legislative intent behind enacting ERISA was to safeguard employees and the concerned beneficiaries from the mismanagement or denial of funds as per retirement plans sponsored by the employer. ERISA bonds are a way that employees and their families can secure their position.

Employers’ failure to provide funds can cause serious losses to the employees. This failure can be due to forgery, wrongful conversion, larceny, embezzlement, misappropriation, etc.

The U.S. Department of Labor has laid down six tests to assess which employees and administrators are required to be bonded. Some of them are exempt from the purview of the ERISA Bond requirement.

Funds that are put into these sponsored retirement plans are secure regardless of who contributes to it, the employer or employee. Both parties can make contributions in the form of checks, cash, or any specified property.

If you want to protect your interests as an employee, you need to sign a bond agreement with two parties, the principal and the surety. If the principal engages in wrongful action or causes financial loss to the employee, you can file a claim. A surety is responsible for establishing the validity of your claim, and once the validity has been established, the principal is obligated to pay. If the principal refuses to pay or neglects to pay, the surety will pay you instead. They will seek reimbursement from the principal.

Want to apply for ERISA Bonds online? At Suretegrity, we have made it easier to purchase ERISA Bonds online.