Contribute stock?

[David]

Can a company contribute, as a corporate contribution to the company's qualified profit sharing plan, the stock of a publicly traded company (not related). The corporation owns the stock and they want to "transfer" it to the plan as a company contribution. They would record it on the corporate books at the market value on the date of transfer, realizing any gain/loss for tax purposes. The company wants to avoid the transaction costs of selling the stock and buying it again for the pension trust.

[Jon Chambers]

In-kind contributions are generally permissible, but increase the plan's chance of audit. Significant documentation will be required to ensure that the property (in this case, stock) was properly valued at the time of contribution. I'd suggest that the cost of selling the stock and then contributing cash is probably less than the implicit cost of having the plan audited by the IRS.