profit sharing contribution but no profits

[Santo Gold]

A small engineering firm has a 401k plan.  They are showing an operating loss for the 2018 year.  The plan sponsor would still like to deposit a discretionary PS contribution.  The plan document is clear that is permitted.  However, (details not clear on this), he has a contract with the state of New York for some/all of his business which states in part that there can be no PS if no profits.  

I am recommending legal counsel for this but just wondering:  Does an ERISA plan document take precedent over a state contract like this?  

Thanks

[david rigby]

As you state, the plan permits a contribution; the contract says no.  Sounds to me like the contract takes precedent over a possible management decision to make a contribution.  The contract has no bearing on the plan.  Do I have the facts correct?

[QDROphile]

Profit sharing and a qualified retirement plan profit sharing contribution are not even close to the same thing.  You need to know more about the contract. Or, as you suggest, consult a professional who understands government contracts.

[CuseFan]

Exactly. We think of PS as a qualified retirement plan contribution, but the context of the contract may solely refer to the distribution of profit sharing, i.e., essentially bonuses.

[Patricia Neal Jensen]

These are two entirely separate problems.  As you point out, the plan document permits it and such contributions have nothing to do with "profit" (403(b) plans, for example) in today's world.  He can make the contribution and it does not resolve the issue with the state contract.... either way.