Bonding after pension plan termination

P/OPINION 75-124


                                                                412


                        September 9, 1975


Dear           :

This is in reply to your letter of June 19, 1975, in which
you inquire whether the six plan officials of the
             Workers Pension Plan are required to be bonded
pursuant to the provisions of section 412(a) of the
Employee Retirement Income Security Act of 1974 (the Act).
In this regard, you represent in your letter that the subject
Plan was terminated as of December 20, 1974.

Under section 414(b)(3) of the Act, the provisions of
Part 4 of Title I of the Act, including, as here relevant,
the bonding provisions of section 412(a) of the Act, are
effective as of the date of enactment of the Act (September
2, 1974) with respect to a plan which terminates after June 30,
1974, and before January 1, 1975, and to which, at the time
of termination, section 4021 of the Act applies. The Pension
Benefit Guaranty Corporation has informed us that section 4021
of the Act applied to the                         Workers
Pension Plan at the time of termination of the Plan, December 20,
1974. Therefore, the bonding requirements set forth in section
412(a) and in the temporary bonding regulation under section
412(e) of the Act (40 FR 2203, January 10, 1975) are
effective with respect to the Plan.

Your letter also indicates that a recent premium for your
errors and omissions policy has not been paid. In this
regard, it should be noted that section 412(a) requires
bonding coverage only against losses which occur by reason
of fraud or dishonesty; "errors and omissions" coverage is
not required under the Act. Accordingly, the failure to
pay the premium for that policy would not result in a
violation of section 412 of the Act, as long as adequate
bonding arrangements were made pursuant to section 412(a)(2)
to cover those persons who handle plan funds, for losses
incurred by the plan by reason of fraud or dishonesty.

Sincerely,