What is the proper Code Section indicating the PS/MP contributions mus

[Guest TracyAndrews]

What Code Section dictates that only cash can be used to fund Pension / Profit Sharing Plan contributions and not stock? I have a partnership low on cash who wants to fund their 2000 contribtion by transferring stock shares, I have told them this is not correct, that the contribution must be made in cash, however I am having a hard time finding the proper site. Also their investment advisory firm told them they would accept stock shares for the profit sharing contribution but not the money purchase...could this be correct????

[rcline46]

My memory tells me it was a court case known as 'Keystone'. ERISA itself prohits promissory notes.

[Guest Jim Hunzelman]

Yes, it was the Keystone case and it went to the Supreme Court. My understanding is that contributions in kind (shares of stock, bonds, etc.) are acceptable for a profit sharing plan, but plans subject to IRC 412 (defined benefit, money purchase, etc.) must receive cash. Sounds like the investment firm is giving them the correct answer.