In general, a trustee for a 401(k) qualified retirement plan subject to the ERISA rules is required to be bonded. However, ERISA Section 412 provides an exemption for trustee bonding. The following is an excerpt from ERISA Section 412:
“Every fiduciary of an employee benefit plan and every person who handles funds or other property of such a plan (hereafter in this section referred to as ‘‘plan official’’) shall be bonded as provided …”
Thus, it is clear that the trustee of a 401(k) Plan that is adopted by a business with more than one employee other than the owner or spouse of the owner, will be subject to the ERISA bonding requirements.
The question then becomes – is a solo 401(k) Plan trustee subject to the ERISA trustee bonding requirement? FSB 2008-04 states that a 401(k) Plan with no employees is exempt from Bonding because the plan is exempt from Title I of ERISA.
For more information on the Solo 401(k) Plan, please contact a tax expert at 800-472-0646 or visit www.irafinancialgroup.com