Great news on Transit Plans!

January 3, 2013

 

by ANN CARRNS  

New York Times 

 

Those who commute to work using mass transit or van pools are eligible for the same amount in employer-provided pretax commuter benefits this year as their colleagues who drive and park, thanks to the fiscal package passed by Congress this week.

Workers whose employers offer such benefits can pay for their monthly transportation costs through pretax payroll deductions, saving them money.

 In 2012, the amount that mass transit commuters were allowed to set aside monthly in their pretax commuter accounts fell to $125, from $230, while the limit for parking costs increased to $240, from $230, because of a cost of living adjustment.

The new fiscal measure increases the pretax transit benefit to $240 a month. (The actual cap is subject to confirmation by the Internal Revenue Service, which can adjust it in increments of $5, if necessary, to reflect inflation, said Jody Dietel, compliance officer with WageWorks, a benefit management firm.)

 But because the fiscal package merely extended this “parity,” rather than making it permanent, its continuation after this year is still subject to future legislative action.

 Why is it so difficult to make the equal benefit permanent? It does not seem to make sense to offer more of an incentive to drive than to take mass transit.

 Ms. Dietel said the transit benefits were lumped together with various other “extender” provisions in the tax code – items that have to be revisited and approved periodically. Conflicts in Congress make it difficult to reach agreement on fiscal matters.

 “Congress is very politically charged,” Ms. Dietel said. The loss in tax revenue from the transit parity provision is estimated at $220 million, according to the Joint Committee on Taxation.

 WageWorks is part of a group working to support transit benefits, which are especially popular in urban areas. “We are working hard to make it permanent,” she said.

 Although the measure also makes the benefit parity retroactive for 2012, it is unclear how employees who take public transit will be able to take advantage of that provision. The fiscal act was passed on Jan. 1, after most company payrolls had closed for 2012, Ms. Dietel noted, and “the devil is in the details.” WageWorks and other benefit managers are seeking guidance from I.R.S. on the matter, she said, but it may be that most employees will see the higher transit limit as a benefit in the future. 

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