S-Corp Stock

[Guest bankergirl]

I have an underfunded DB plan for an S-Corp. Can the plan accept company stock as a contribution if held and validated by an independent trustee?

[SoCalActuary]

Can't afford the pension? S-corp stock will be deemed worthless if there is a large underfunded pension. So go ahead and put the worthless paper in the plan and pay the excise tax on the prohibited transaction.

Or, on the other hand, borrow the money elsewhere and actually pay for the pension promise made.

[ESOP Guy]

SoCal is correct about the PT. Only ESOPs can hold S corp stock without the PT. Also, if earnings flow through to the trust from the corp it would have to pay unrelated business income tax (UBIT). Once again only ESOPs can hold S corp stock and not pay that tax.