I have a client who said the company would make a $50,000 contribution to its PS Plan. Benefit statements and 5500 C/R were prepared. Now, it's possible the company can't/won't come up with the money.

I don't know if the 1120 and/or 5500 have been filed yet. I'm fairly sure the benefit statements have been distributed.

Has the company irrevocably commited to the contribution?

Assuming that the profit sharing formula in the document is fully discretionary, there should have been a corporate resolution (or similar for unincorporated businesses) prepared and executed, declaring the contribution to be made.

If this is the case, the resolution is a legal document which I would think creates a "contract" between the company and the plan. If it came to a bankruptcy situation I don't know where it would fall in the pecking order of obligations. Such a contract should be enforceable by the plan Trustee. However in a small company this is likely to be the owner, so the partiipants would have to take the issue to the DOL.

In lieu of a formal declaration of the contribution, there is probably just a communication nightmare with the participants, and a hard lesson learned. The 1120 and the 5500 can both be amended to take out the contribution.

Interesting! Must be some case law out there.

Even if the resolution is a "contract" between the corp and the plan, I would think it's not enforceable by the plan unless the plan "detrimentally relies" on the corp's resolution ... basically it looks to me like a "gift" by the corporation that could be canceled any time before the money is handed over to the plan's trustee.