If you're setting up a new 401(k) plan, you'll need to secure an ERISA fidelity bond before your plan is active. Here's what it is, why it's required, and how to get one quickly.

What is a fidelity bond?

A fidelity bond is a type of insurance that protects your employees' retirement savings. The IRS and the Department of Labor (DOL) require every 401(k) plan to carry one. It covers your plan against losses from fraud or dishonest acts by the people who manage it, such as theft or misuse of plan assets.

How much coverage do I need?

By law, your bond must equal at least 10% of your plan's assets, with a $1,000 minimum and a $500,000 maximum.

If you're starting a new plan with $0 in assets, a $250,000 bond is typically enough coverage for the first few years. This usually costs only a few hundred dollars a year.

Why this matters

Failing to carry a fidelity bond can put your plan at risk of a DOL investigation and expose the people responsible for the plan to personal liability. Getting this in place before your kickoff call keeps your plan on track and protects the people who trust you with their retirement savings.

How to get one

  1. Check your existing coverage first. Your business insurance broker may have already included a fidelity bond as part of your business insurance package. Ask your broker whether you're already covered.
  2. If you're not covered, get a quote. Ubiquity has partnered with Colonial Surety Company, a national, U.S. Treasury-listed insurer that specializes in ERISA compliance. They'll help you get properly bonded, guarantee competitive pricing, and automatically renew your bond before it expires.
  3. Send us your bond details. Once you have a bond in place (through Colonial Surety or another provider), email the following to newplan@myubiquity.com:
    a. Name of the insurance company issuing the bond
    b. Bond amount
    c. Expiration date

Need help?

Contact your dedicated service team at 855.401.4357, Option 1, or email newplan@myubiquity.com. We're here to help you get this squared away before your kickoff call.