What are ERISA Bonds?

With Inflation Guard at No Added Cost

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in the private industry.

ERISA bonds provide protection for these private industry plans. The bond protects the employee benefit plan from fraud or dishonesty committed by those who handle the plan funds. Retirement plans, health plans or welfare benefit plans may need ERISA bonds.

Who Needs the Bond?

ERISA bonds are required of people who handle plan funds and other property. Each person must be bonded in an amount equal to at least 10 percent of the funds handled in the preceding year, with a maximum bond limit of $500,000.


These bonds can be instantly issued up to $500,000 with no signed application or indemnity on the Merchants Bonding Company Hub™. Merchants has adopted the SFAA blanket bond form that covers all Plan Officials automatically.

The bond form is pre-executed for your convenience and Merchants automatically includes Inflation Guard on ERISA bonds at no additional cost. Inflation Guard increases your coverage to meet ERISA’s requirements during the three-year bond term. This endorsement is only valid if the bond limit met the minimum requirement of 10 percent at the time the bond was issued.

How Do I Get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change.