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Investment Advisors ERISA Bonds
Section 412 under
ERISA states every fiduciary of an employee benefit plan and every person
who handles funds or other property of such a plan shall be “bonded” against
fraud or dishonesty. Investment Advisors who control Plan Assets and make
investment decisions for ERISA Plans are required to maintain an Investment
Advisors ERISA Bond. An Investment Advisors ERISA bond is a specific bond
written for investment advisors and is required of all ERISA Fiduciaries under
ERISA Section 412.
Investment
Advisors are required to have this bond with limits of a percentage of
assets under management, up to a maximum of $500,000* for each qualifying plan.
Bonds can be
written on an individual basis, where each plan is identified, or written as a
blanket bond covering all plans.
The Underwriter
will review the following information:
Notes:
1.) ERISA plans
should require third-party vendors who handle plan funds to provide a
copy of a current ERISA bond with the individual plan named as evidence of
insurance.
2.) Most bonds
will automatically cover new clients added during the year at no additional cost
3.) Investment
advisor’s ERISA bonds are sometimes also called 3rd Party Fidelity Bonds
* Under the The
Pension Protection Act of 2006 bonding limits may rise to $1,000,000
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