By Carol Buckmann
One of the basic requirements of ERISA is that all fiduciaries and other persons who handle plan funds must be bonded to protect the plan against losses due to their fraud and dishonesty. There was a bonding requirement even before ERISA was enacted, so I am always surprised to come across plans that still don't have a bond. It seems that vendor employees don't educate the company fiduciaries about the bonding requirement when plans are set up.
The bond is not the same as fiduciary liability insurance; it provides recovery to the plan as a named insured if there is a loss. There are special requirements that apply to ERISA bonds and they can only be purchased from approved companies, so even if you have a bond, it might not be compliant. I came across this summary of the bonding requirements prepared by ForUsAll. It is worth studying because if you don't have a proper bond, you may be personally liable to make up the losses that should have been covered.