This page calculates an amount only after the §412 eligibility questions are resolved. A plan label, asset balance, or job title does not establish that a bond is required. Confirm Title I and Part 4 coverage, funds or other property, each natural person's handling, and any exemption first. 29 U.S.C. §1112
The statutory calculation is person-specific
At the beginning of the plan fiscal year, the required protection for a person, group, or class is at least 10% of the funds handled by that person, group, or class (and a predecessor, if applicable) during the preceding reporting year. The statutory minimum is $1,000 per plan. The ordinary statutory cap is $500,000 per plan; the statute substitutes $1,000,000 for that amount for a plan that holds employer securities and for a pooled employer plan. After notice and an opportunity for hearing, the Secretary may prescribe an amount above the applicable ordinary cap, still subject to the 10% limitation. 29 U.S.C. §1112
“Funds handled” is not automatically the plan's year-end assets. The regulations tie the amount to the funds handled by the covered person, group, or class. Start with the actual scope of each handler's authority and the relevant prior reporting-year records. 29 C.F.R. Part 2580 DOL FAB 2008-04, Q35–Q40
Use the functional handling guide to identify the people, groups, or classes whose actual authority supplies the calculation inputs.
A practical calculation method
- 1List each nonexempt natural person, group, or class that handles the plan’s funds or other property.
- 2For each, identify the amount handled in the preceding reporting year, including predecessor handling where applicable.
- 3Multiply that amount by 10%.
- 4Apply the $1,000 floor and the applicable ordinary $500,000 or $1,000,000 cap, then check for any higher amount prescribed under the statutory procedure.
- 5Check that the selected bond actually makes the required amount available to the plan for that handler and plan.
Illustrative calculations—not coverage recommendations
Example: two handlers can have different requirements
Assume a Title I plan subject to Part 4, with no exemption. Alex had final authority over $80,000 of plan funds in the preceding reporting year: 10% is $8,000, so the illustrated minimum for Alex is $8,000. Morgan handled $2,500,000: 10% is $250,000, so the illustrated minimum for Morgan is $250,000. These figures do not substitute a review of the bond's aggregate and per-plan terms. 29 U.S.C. §1112
Example: ordinary statutory cap
Assume the same eligibility facts and no employer-securities or PEP substitution, and assume no higher amount has been prescribed through the statutory procedure. A handler had $7,000,000 in relevant preceding-year funds handled. Ten percent is $700,000, but the ordinary statutory cap limits the illustrated amount to $500,000. 29 U.S.C. §1112
Example: employer securities or a PEP
If the plan holds employer securities, or if it is a pooled employer plan, a handler with $7,000,000 handled produces a $700,000 calculation, below the ordinary $1,000,000 cap. If the calculation were $1,400,000, the ordinary cap would limit the illustrated amount to $1,000,000 unless a higher amount had been prescribed through the statutory procedure. The higher ordinary cap does not mean every ESOP or PEP needs $1,000,000.
Employer-securities status depends on actual holdings; PEP status also does not make every fiduciary or participating-employer worker a handler. See the MEP and PEP guide for the shared-administration and PEP-specific cap analysis. 29 U.S.C. §1112 U.S. Department of Labor Information Letter, Sept. 7, 2022
New plans and newly assigned handlers use different lookbacks
If the plan has no preceding reporting year, §412 uses the funds estimated to be handled during the current reporting year under the Secretary's regulatory procedure. For an established plan, assigning a new person does not erase the lookback: the calculation includes handling by that person's predecessor or predecessors, if any, during the preceding reporting year. Do not substitute a current-year estimate merely because the individual handler is new. 29 U.S.C. §1112 29 C.F.R. Part 2580
Example: a plan with no preceding reporting year
Assume a new eligible plan expects a payroll administrator to receive and direct $120,000 of contributions and payments during its first reporting year, and no exemption applies. Ten percent is $12,000, so $12,000 is the illustration's required amount for that handler, subject to confirming the estimate and bond terms. A different person with only $6,000 expected handling would calculate to $600, then use the $1,000 statutory floor. 29 U.S.C. §1112
Document the inputs, then check the form
Retain the handler list, authority facts, source records, calculation, and reason for the selected maximum. A shared, blanket, or existing commercial bond is not sufficient by label alone: the plan must be properly protected, and coverage for one plan must not improperly exhaust another plan's required recovery. DOL FAB 2008-04, Q22–Q25 and Q39–Q40
Next, use the requirements checklist to review no-deductible, plan-protection, surety, and reporting points. For an ESOP, see the employer-securities guide; it explains why the $1 million figure is a maximum, not a universal requirement.
For a blanket, scheduled, or other shared arrangement, use the multiple-plans guide to assess whether each plan retains the required protection.