Bankruptcy filing by sponsor of a safe harbor 401(k) plan

[Guest s.c.semler]

I have a safe harbor 401(k) plan sponsor who has filed for chapter 11 bankruptcy. The safe harbor employed by the plan is a 3% of comp non-elective contribution. The employer is unable to make the safe harbor contribution for 2001 (and presumably 2002). The safe harbor notice was provided to each participant to the best of my knowledge. All salary deferrals have been deposited.

It seems to me the company is required to make the contribution, but, not being familiar with bankruptcy law etc., what would the ramificiations be if the contribution was not made?

Any thoughts on this matter are greatly appreciated!

[mbozek]

Filing of bkcy petition stays all obligations including pension plan contributions. Plan may have a priority claim for contributions due as of date of filing of bkcy. Plan may have to be revised to eliminate safe harbor provison. Plan will probably be terminated as part of Ch 11 filing in order to reduce debt obligations of employer.