Compnay Stock in 401(k) plans

[Guest elem]

A public company wishes to use company stock in their 401(k) plan (as a match or profit sharing contribution, and an investment option). Are there restrictions on the amount of stock used as a match or a profit sharing contribution? Is a stock match/contribution the same as a cash match/contribution for 401(a)4 testing and safe-harbor?

I have seen previous discussions concerning a KSOP plan design. Based on what I have read, it seems that the primary advantage to creating a 401(k)/ESOP plan would be that the dividend would be tax deductible. Is this correct?

[Guest Harry O]

Dividend deductible (if offer cash option and not in AMT), cash flow advantages (if contribute treasury stock and your other shareholders don't mind the dilution), a block of stock is in supposedly "friendly" employee hands, net unrealized appreciation, etc.

[Guest elem]

Harry O:

Just to clarify:

The Dividend is deductible if it is allowed to be taken in cash. I'm not sure what you mean by "not in AMT".

Other than the deductibility of the dividend, the other advantages that you mentioned are not dependent upon the existence of an ESOP feature in the 401(k). Or are they?

[Kirk Maldonado]

Be sure that the company gets advice on the securities laws aspects of having company stock in the plan by somebody that also understands qualified plans.

[stephen]

To take this one step further what if the company wants to have ALL of the company stock in the plan as a match or investment and switch to a c-corp without converting to an ESOP?