Contributions in other than cash

I have some general knowledge on this - I know property can't be contributed to a DB plan - but can't seem to figure out where to research more deeply. A sole proprietor is asking if he can contribute CDs by transferring them. I think the answer is no but need to be pointed in the right direction. There are certainly issues having to do with potential gains and losses at the point of transfer, but might CDs be considered "cash"?

Are you talking about a PENSION plan, or a purely discretionary Profit Sharing Plan? At any rate, I think you want DOL regulation 2509.94-3, (c).

P.s. - the (c) is if it as a PS plan. If you are actually talking about a DB plan, then it would be paragraph (b). But as to whether a CD could be considered "cash" - I'd opine, for what little it is worth, that it's verboten. I lean towards conservatism on such issues. Ultimately an ERISA counsel question as far as I'm concerned.

It's a DB pension and thanks, that's what I was looking for.

No for DBPs and only cash is cash.

I am not sure I agree.  The key point is to avoid the prohibitive transaction (real estate, employer securities, arm-length, etc.).   Contributing “marketable securities” feels ok to me and it boils down to proper determination of the market value for the deposit.  Contributing CD feels ok.

Commissioner v. Keystone Consol. Industries, Inc., 508 U.S. 152, 159-162, 16 Empl. Benefits Cas. (BL) 2121 (May 24, 1993) (The Court construed ERISA title II’s parallel text, Internal Revenue Code § 4975(f)(3), as extending, but not limiting, the reach of § 4975(c)(1)(A) [ERISA § 406(a)(1)(A)] to include as such a prohibited sale or exchange a contribution of encumbered property, even if that contribution is not used to meet a funding obligation. The Court held a contribution of property other than money—even assuming the property was unencumbered, and the contribution was valued at the property’s fair market value—was a prohibited transaction.)

The Labor department’s Pension and Welfare Benefits Administration further interpreted this in Interpretive bulletin [94-3] relating to in-kind contributions to employee benefit plans (Dec. 21, 1994), 59 Fed. Reg. 66736 (Dec. 28, 1994), reprinted in 29 C.F.R. § 2509.94-3, https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-A/part-2509/section-2509.94-3.

I think you will find these useful:

Also, the written terms of the certificate of deposit might make the CD nontransferable and nonassignable.