If you own a business, and you provide employee retirement benefits, you need to ensure that any person who has control over the retirement accounts be bonded through a fiduciary bond. The fiduciary bond protects your employees against losses, and mismanagement, that could affect their retirement accounts. If you're not sure what fiduciary bonds are, here's some basic information that will help you understand the process:
Fiduciary Bonds Protect Against Fraud and Dishonest Dealings
Wherever there are employee retirement accounts, the possibility of fraud and dishonest dealings will exist. This is true of any retirement account, especially when there are only a handful of people who have access to those accounts. Unfortunately, when fraud and dishonest dealings occur, employees can find their entire retirement accounts wiped out. When that happens, employees have little, to no, legal recourse. That's where a fiduciary bond comes into play. Fiduciary bonds protect retirement accounts against losses incurred through fraud and dishonest dealings. Some of the losses that are covered by a fiduciary bond include embezzlement, larceny, forgery, and misappropriation of funds.
Bond Amounts Must Be Appropriately Assessed
When it comes to setting bond limits, the coverage must be appropriately assessed at the beginning of the term. That means you'll need to assess those bond limits at the beginning of each fiscal year. In most cases, fiduciary bonds are established for a specific percentage of the actual monetary value of the account being handled. If the bond limit isn't assessed accurately, the retirement account may not be adequately protected against losses. If you're unsure about the bond amount you'll need, you should discuss the matter with your financial planner.
Fiduciary Bonds Protect Against Non-Fiduciary Agent Losses
When obtaining your fiduciary bond, it's important to note that the bond is not the same as fiduciary insurance. Where fiduciary insurance protects against fiduciary mishandling, fiduciary bonds protect employees against losses even if the responsible party was not acting as an official fiduciary agent. If you have fiduciary, and non-fiduciary agents handling your employee retirement accounts, you'll need both fiduciary liability insurance, and fiduciary bonds.
Coverage Must Be Clear and Understandable
If your company controls multiple employee accounts, they can all be protected under the same bonds. However, the bonds will need to be written in a way that is clear and understandable. To ensure clarity, each account must be identified in the bond, including the type of account it is, and how much the account is worth.
Don't risk losing your employee retirement accounts. The information provided here will help you understand fiduciary bonds, and how they relate to your employee retirement accounts.Share
1 September 2017
When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.