Advisory Opinion 1975-117

Dear :

This is in response to your letter of March 18, 1975, in which you ask the minimum number of employees under a profit sharing plan before fiduciaries are required to be bonded under the provisions of the Employee Retirement Income Security Act of 1974 (Act).

There is no provision in the Act exempting plans with a minimum number of participants from the bonding requirements of section 412.

The Secretary has issued a temporary regulation (29 CFR Part 2555) which, pending issuance of a permanent bonding regulation under section 412 of the Act, incorporates by reference most of the bonding regulations issued under the Welfare and Pension Plans Disclosure Act and makes them applicable to plan officials under the Act.

Pending the issuance of permanent regulations with respect to section 412 of the Act, a fiduciary is not required to be bonded unless he handles funds or other property of an employee benefit plan. "Handling" occurs whenever the duties or activities of a plan official are such that there is a risk that such funds or other property could be lost in the event of fraud or dishonesty on the part of such person, acting either alone or in collusion with others.