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© Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 15 procedures described in Section 1.6 to receive your full compensation in cash, or to ha ve a portion of such compensation applied by the Employer toward your share of the cost of Optional Benefits. If so elected, your compensation will be reduced, and an amount equal to the reduction will be allocated by the Employer to the Optional Benefits you have designated. Your compensation shall be reduced by pro-rata amounts of your total salary reduction election. Salary reduction is done on a pre-tax basis before any withholdings have been made. The frequency of salary reduction contributions shall be only two payroll periods per month. Notwithstanding the forgoing, if participation in an Optional Benefit extends to the last day of the month in which your employment terminates, if necessary, additional salary reduction contributions shall be taken from your final paycheck to pay for the coverage provided during the period of time following the date on whic h your employment terminates. (c) Salary Deduction Contributions. Sometimes the Internal Revenue Code or your Employer does not allow payment with pre-tax dollars. Payments which may be made with after-tax dollars may be paid through a salary deduction agreement. A salary deduction agreement provides for a payroll deduction to be made throughout a Plan Year out of your compensation after taxes and withholdings have been made. 1.16 What if coverage is provided to someone other than your spouse and tax dependents? If you participate in an Optional Benefit that covers a dependent who is not your “spouse” or “tax dependent,” the entire cost of coverage for Optional Benefits for which you are responsible shall be paid pre-tax through this Cafeteria Plan and the fair market value of the coverage for that Dependent shall be imputed as income to you as the coverage is provided. This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer contributions, if any. For purposes of this Cafeteria Plan, “spouse” means a person to whom you are legally married in accordance with applicable state law. For purposes of this Cafeteria Plan, “tax dependent” generally includes an individual who satisfies the requirements of paragraph (a), (b), or (c) below: (a) an individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (2) will not attain age 27 during the relevant calendar year. (b) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (2) has the same principal place of abode as you for at least one-half of the relevant year; (3) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (4) did not provide over half of his/her own support during the relevant year;