However, affected plan sponsors may need to act fast

In Notice 2020-52, the Internal Revenue Service (IRS) liberalized certain limitations on a plan sponsor’s ability to reduce or suspend contributions to the sponsor’s safe harbor 401(k) or 403(b) plan. The relief is limited, however, to amendments adopted between March 13 and Aug. 31, 2020. The temporary relief is being provided “[d]ue to the unprecedented nature of the COVID-19 pandemic . . . .”

Without the relief provided in Notice 2020-52, sponsors of safe-harbor plans generally may reduce the sponsor’s non-elective or matching safe-harbor contributions during a plan year only if, among other requirements, the plan sponsor expressly reserved the right to do so in the safe-harbor notice that the sponsor distributed to eligible employees prior to the start of the current plan year, or the plan sponsor is operating at an economic loss during the current year. When otherwise permitted, a reduction in safe-harbor contributions can be effective no earlier than the later of the date the amendment is adopted or 30 days after eligible employees are provided with a detailed supplemental notice that describes the effects of the amendment, the procedures eligible employees must follow to change their own contributions, and other related information. Also, if a permitted mid-year amendment is adopted and implemented, ADP (Actual Deferral Percentage) and ACP (Actual Contribution Percentage) testing, as applicable, must be performed under the current-year testing method and each applicable test must be satisfied for the entire plan year. (Plans intended to satisfy the requirements of Internal Revenue Code section 403(b) are not subject to ADP testing.)

Notice 2020-52 provides temporary relief regarding the circumstances under which safe-harbor contributions can be reduced or suspended mid-year. Specifically, the plan sponsor may reduce or suspend safe-harbor contributions mid-year (in 2020) even if the sponsor did not reserve the right to do so in the original safe-harbor notice and even if the sponsor is not operating at an economic loss. 

This temporary relief is conditioned upon the plan sponsor’s adoption of an appropriate plan amendment between March 13 and Aug. 31, 2020. Further, with respect to nonelective safe-harbor contributions, the amendment must be adopted on or before the date the reduction or suspension will be effective and notice of the reduction or suspension must be provided to eligible employees no later than Aug. 31, 2020. Regarding safe-harbor matching contributions, notice of the reduction or suspension must be provided to eligible employees at least 30 days before the reduction or suspension will be effective. Full-year ADP and ACP testing will apply, as noted above.      

Stephen C. Daley is a member (partner) of Syracuse-based Bond, Schoeneck & King PLLC. He is chair of the firm’s employee benefits and executive compensation practice. Contact Daley at sdaley@bsk.com

Some business leaders who are bright and hard-working also can be extremely demanding and difficult for which to work. In fact, such a leader’s behavior and its negative impact on others may reach the point where the business becomes dysfunctional. 

A boss who is both bright and abrasive has many characteristics, and the draining combination of them can lead to running more people off than running a long-term successful business. 

A brilliant but abrasive leader is extremely talented but is driven to gain recognition above all else. They are exceptionally intelligent, but they use that intelligence for their own professional benefit rather than in the best interest of the company. 

Moreover, they are blinded to the costs their behavior has for individuals, teams, and the organization as a whole. They can destroy people’s self-confidence and inflict serious, lasting damage on their company. This toxic environment erodes morale and causes turnover to spike.

Here are five characteristics of bright but abrasive leaders:

They lack empathy. These leaders have a blind spot — their understanding of other people’s emotions. Leaders of this type are not naturally tuned in to what others are thinking and feeling. Their focus is on goals and outcomes rather than on people. 

They are volatile and manipulative. Nobody is comfortable with a leader who could explode at any second or sabotages them. They are verbally abusive, flying into screaming rages and even physically threatening coworkers. Their underlying anxiety often translates into explosive and uncontrolled emotional outbursts. They micromanage an employee to an extent that makes work impossible. More subtly, abrasive leaders undermine employees by creating conflict, withholding critical resources, and waging a kind of psychological warfare against those they perceive as a threat.

Many are perfectionists. While being a driven leader is an admirable quality, some go too far when rarely taking the foot off the accelerator and running over employees in the process. This often comes in the form of setting unrealistic standards and changing deadlines without much notice or reason. 

They are never satisfied with their own work and continually push themselves to work harder. Abrasive leaders are intensely motivated to gain recognition through outstanding results, and they expect no less of the people around them. They can be very hard on their employees. They put constant pressure on their direct reports and offer little to no recognition.

Struggle to maintain good relationships. Not good at reading others’ emotions, abrasive leaders find it hard to maintain positive interpersonal relationships. They hurt people without intending to do so. Some abrasive leaders are good at identifying people’s weaknesses, but they use this skill to satisfy their drive toward perfectionism and, by doing so, harm people. They place enormous focus on results, but they fail to see that to increase results, they need to engage autonomous, thinking, creative people who are not submissive to their leader’s every request.

Have a fear of failure. Abrasive leaders are often defensive and on high alert for challenges to their leadership. They feel personally threatened by their direct reports’ failures. To protect themselves, they feel a strong need to control their environment. A perceived threat to their professional reputation or self-image will send brilliant but abrasive jerks into attack mode immediately.

Abrasive leaders can be incredibly charismatic, especially to clients. Due to their razor-sharp intelligence, they have strong powers of persuasion. But they also create a culture of fear that robs employees of their voice and deadens creativity.            

Katrina Burrus (www.ExcellentExecutiveCoaching.com) is author of “Managing Brilliant Jerks: How Organizations and Coaches Can Transform Difficult Leaders into Powerful Visionaries” and founder of MKB Conseil & Coaching and Excellent Executive Coaching, LLC.