Plan contributions made in stocks held by corporation

Just was informed that the client made 300k of db contributions in all kinds of different stocks held by the corporation rather than cash.

This is the first time I am dealing with this and any guidance on how to correct it is appreciated. 

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

Had some discussion on this back in 2007 and I am still not convinced that direct transfer of stocks as a contribution in-kind should be considered a prohibited transaction, but I am most likely alone in this.   In-Kind Contribution - Defined Benefit Plans, Including Cash Balance - BenefitsLink Message Boards

From https://www.law.cornell.edu/cfr/text/29/2509.94-3 (emphasis mine)

(b) Defined benefit plans. Consistent with the reasoning of the Supreme Court in Keystone, because an employer's or plan sponsor's in-kind contribution to a defined benefit pension plan is credited to the plan's funding standard account it would constitute a transfer to reduce an obligation of the sponsor or employer to the plan. Therefore, in the absence of an applicable exemption, such a contribution would be prohibited under section 406(a)(1)(A) of ERISA and section 4975(c)(1)(A) of the Code. Such an in-kind contribution would constitute a prohibited transaction even if the value of the contribution is in excess of the sponsor's or employer's funding obligation for the plan year in which the contribution is made and thus is not used to reduce the plan's accumulated funding deficiency for that plan year because the contribution would result in a credit against funding obligations which might arise in the future.

I bet the client thought about saving on taxes by doing this. In reality this would just save trading fees, since a corporation should record this as a taxable event as if these stocks were sold first and then cash contributed to the plan.

The Labor department has published at least 30 individual exemptions for a contribution made by a delivery of property other than money, most often securities.

https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/exemptions/granted#In%20Kind%20Contributions%20to%20Plans

Many applications are withdrawn or never submitted because the party-in-interest finds that the expense of persuading the Labor department is disproportionate to the value that might be had by contributing property other than money.