Whether the employee is given the option to choose the salary reduction agreement
or, as a condition of employment, is required to make a contribution that reduces
his or her compensation, the amount of the salary reduction is wages for social security
purposes because it has been constructively received by the employee. For instructions
regarding constructive receipt of wages, see RS 01401.030.
EXCEPTION: If the salary reduction is used to purchase qualified benefits in a cafeteria plan
that meets the requirements of section 125 of the IRC, such amounts are excluded from
wages. For information regarding cafeteria plans, see RS 01402.030