HOPEFULLY SOMEONE CAN HELP ON THIS ONE. I HAVE A C CORP CLIENT WHO SEVERAL YEARS AGO TOOK STOCK OPTIONS FROM A CUSTOMER IN LIEU OF CASH FOR SERVICES. THE CLIENT WOULD LIKE TO ASSIGN THE OPTIONS TO THE COMPANY RETIREMENT PLAN INSTEAD OF MAKING A CASH CONTRIBUTION TO THE PLAN. THE OPTIONS HAVE AN EXERCISE PRICE OF $3.50 PER SHARE AND THE STOCK IS PUBLICLY TRADING AT $63.50. CAN THE OPTIONS BE ASSIGNED TO THE MPP AS A CONTRIBUTION AT $3.50 PER SHARE. PLEASE CITE ANY APPLICABLE IRS REGS.

No. There is DOL guidance (not regulations) that this is a prohibited transaction. Sorry, I don't have a cite.

I would have to agree that it isn't allowed - one item for contention would also be if the plan allowed "Property" as a contribution, most plans don't allow that type of a contribution. The other point would be that the employer would then be taking a deduction for income from a prior period of time...

I think he's out of luck, and will have to make what ever required contributions there are for the year in cash.

If you find something to the contrary though - please be sure to post it so as to enlighten the rest of us.

Thanks -

I found that the contribution of unencumbered
employer property by the employer would constitute a prohibited transaction under IRC
ss. 4975 (See CIR vs Keystone Consolidated Industries)