The question was raised whether safe harbor matching contributions could be made in Employer stock.  The concern was that DOL Interpretive Bulletin relating to in-kind contributions to employee benefit plans [Section 2509.94-3©] prohibited it.  It states, "In the context of defined contribution pension plans and welfare plans, it is the view of the Department that an in-kind contribution to a plan that reduces an obligation of a plan sponsor or employer to make a contribution measured in terms of cash amounts would constitute a prohibited transaction under section 406(a)(1)(A) of ERISA (and section 4975©(1)(A)of the Code) unless a statutory or administrative exemption under section 408 of ERISA (or section 4975 ©(2)or (d) of the Code) applies."
The volume submitter coordinator called Dick Wickersham in D. C. to look into the question.  Wickersham's assistant maintains that Section 408(e) of ERISA provides the administrative exemption that makes this permissible.  This section deals with the acquisition or sale by plan of qualifying employer securities; acquisition, sale, or lease by plan of qualifying employer real property.  The exemption is available if the acquisition is valued at fair market value; if no commission is charged; and if the plan is a profit sharing, stock bonus, thrift, savings plan, esop, or a money purchase plan which was in existence on the date ERISA was enacted and which invested primarily in qualifying employer securities.  This is what prevents a defined benefit plan or post ERISA money purchase pension plan from being funded with employer stock.  The corresponding Code section is 4975(d)(13).
Therefore, the volume submitter coordinator will permit this in a 401(k) plan if we indicate that the acquisition of employer securities satisfies ERISA Section 408(e).