As a 401k sponsor, you are responsible for the safety and security of your employees’ retirement savings. One way to protect your employees’ savings is by purchasing an ERISA bond. ERISA bonds are insurance policies that protect plan sponsors from financial losses caused by employee theft or fraud. In this blog post, we’ll discuss the importance of ERISA bonds for 401k sponsors.

The Dangers of Employee Theft and Fraud

Employee theft and fraud can happen in any size company. In fact, according to the Association of Certified Fraud Examiners, small businesses are actually more likely to be victims of employee fraud than large businesses. One reason for this is that small businesses often lack the internal controls and safeguards that larger companies have in place.

Another reason why employee fraud is so prevalent is that many employees feel entitled to the company’s money. They rationalize their actions by telling themselves that they’re “just borrowing” the money and that they’ll pay it back eventually. Unfortunately, in most cases, the money is never repaid and the company suffers a financial loss.

ERISA Bonds Protect against Financial Losses

ERISA bonds can protect your company from financial losses caused by employee theft or fraud. If one of your employees steals money from the 401k plan, for example, you can file a claim with the insurance company and be reimbursed for the stolen funds (up to the limit of the policy).

ERISA bonds also provide protection against losses caused by errors or omissions on the part of your employees. For example, if an employee accidentally wires money to the wrong account, you can file a claim with the insurance company and be reimbursed for the lost funds (up to the limit of the policy).

Purchasing an ERISA bond is one of the best ways to protect your employees’ retirement savings from loss due to employee theft or fraud. If you’re not already carrying an Erisa bond, we encourage you to speak with your insurance agent about obtaining coverage.

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