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Cap Increase FAQs for TransitChek Employers and Employees
Find answers to general questions about the new $230 transit limit for commuter benefits, signed into law February 17, 2009 as part of the Emergency Economic Recovery Act.
If you are an administrator, you’ll receive detailed instructions from TransitCenter in the next few days on how to adjust your TransitChek program so that you can offer up to the new cap as quickly as possible.
If you are an employee participating in the TransitChek program, you’ll hear more from your employer about what you need to do within the next few days.
Return to this site regularly for updates and new information.
Employer FAQs
Q. What is the economic stimulus package?
A. Officially known as the American Recovery and Reinvestment Act, this bill was signed into law by President Obama on February 17, 2009 to provide financial relief for a severely weakened U.S. economy. The bill offers several tax-cutting and Federal investment measures, including a provision to increase the transit benefit cap from its current $120 a month limit to $230. By providing these additional tax savings, commuters can recoup up to $1,000 or more a year in tax-free savings for the necessary cost of travel to and from the workplace. And by placing this transit limit on the same level as the current parking benefit limit, the more attractive incentive to choose transit as a mode of transportation over driving could reduce traffic congestion and improve air quality, which is the environmental value of this benefit.
Q. When does the new pretax amount for transit benefits go into effect?
A. The new law goes into effect for the February benefit month or as of February 1, 2009. If you distribute benefits directly to your employees at the workplace you may begin ordering TransitChek benefit products at the new cap level starting today using the TransitChek Order Form.
If benefits are provided directly to your employees through the TransitChek Premium program via mail or electronic funding, specific instructions will be provided by TransitCenter to help you adjust your program to the new levels as quickly as possible. Employees can receive their benefit at the new level for use on June 1, 2009.
Q. What is the maximum my employees can deduct?
A. The new Federal limit allows your employees to deduct up to $230 a month of pretax salary to pay for transit and vanpool commuting expenses and $230 a month for commuter parking.
Q. Is it mandatory to make the increase to $230 for all employees?
A. No. For employers in our TransitChek Premium program who do not want to change to the new limit, you will need to contact the Administrator Support line at 1-866-550-2435 and you should notify your employees of this internal decision. (San Francisco employers should refer to the ordinance http://www.sfgov.org/site/uploadedfiles/bdsupvrs/ordinances08/o0199-08.pdf)
Q. Can we offer a pretax amount with a limit less than $230 per month?
A. Yes. You may set the limit at less than $230 as your company deems appropriate. You will need to contact the Administrator Support line at 1-866-550-2435 and should notify your employees of this internal decision. (San Francisco employers should refer to the ordinance http://www.sfgov.org/site/uploadedfiles/bdsupvrs/ordinances08/o0199-08.pdf)
Q. My company offers the transit benefit as a fringe. Are we required to increase the benefit to $230?
A. No. You may raise the limit if your company chooses to do so, but you can set your company’s limit as you deem appropriate.
Q. What should I do if I want to change my company’s fringe benefit limit?
A. You must contact the Administrator Support Line at 1-866-550-2435 to make the change and should also notify your employees of this internal decision.
Q. We provide a transit benefit as a fringe of $120 to employees and let them take the balance as a post-tax deduction . Do we have to make any changes?
A. Yes. Any amount now deducted by an employee above $120 per month as a post-tax deduction is now considered a pre-tax deduction under the new law, up to $230 per month. Please contact the Administrator Support Line at 1-866-550-2435 to make any changes. We also recommend that you notify your employees of your company’s decision.
Employee FAQs
Q. What are the new pretax limits for commuter benefits?
A: Thanks to the Emergency Economic Recovery and Reinvestment Act (also referred to as the Economic Stimulus Package), the pretax cap for commuting expenses for transit and vanpools will increase to $230 per month from $120. If your company offers a parking benefit, that limit will remain at $230 per month.
Q. Why has the transit benefit amount increased?
A: The transit benefit has been lower than the parking benefit since the inception of IRS Tax Code 132(f). With commuting costs rising and employees relying more on transit to get to work, this significant increase in the transit benefit is a major victory for commuters and charts a new course for the future of mass transit.
Q. How much can I save with TransitChek Commuter Benefits under the new cap?
A. If you only use mass transit or a vanpool to commute to and from work and set aside $230/month of your pretax salary for your commuting expenses, you can save up to $1,000* or more a year in taxes. If your program allows for a parking benefit, your combined savings can increase up to $1,900* a year. Find out exactly how much you can save by visiting http://www.transitcenter.com/Employees/Save.aspx.
* Employee savings computed based on an annual salary of $36,200 and 2009 tax rates for a single individual claiming zero exemption. Employee savings calculated using: Federal, NYS and NYC Income Tax, Social Security and Medicare. Annual savings of up to $1000 or more based on the maximum pretax deduction of $230/month allowed for transit. Annual savings of up to $1900 or more based on the maximum pretax deduction of $230/month allowed for transit and $230/month allowed for parking. Individual savings may vary based on state of resident and other factors. Ask for details.
Q. Is it mandatory for my employer to make the increase to $230 for all employees?
A. No. Your company will decide if it wants to increase the new cap limit for its employees. You should contact your Benefits Administrator for more information. (In San Francisco, it is mandatory to increase to the new cap under certain circumstances. Please check with your employer.)
Q. Can my company offer a pretax amount with a limit less than $230 per month?
A. Yes, your company may set the limit at less than $230 as it deems appropriate. You will need to contact your Benefits Administrator for more information. (In San Francisco, it is mandatory to increase to the new cap under certain circumstances. Please check with your employer.)
Q. What will happen if my commute is currently more than $120 but less than the new cap increase of $230?
A. You will be able to have your pretax deduction adjusted to the exact amount of your commuting costs.
Q. If I’m enrolled for less than the new amount, will I be able to increase to the full $230 and share it with my friends and family?
A. Yes, if your company’s plan permits. The benefit works exactly like the current transit benefit and may be shared with friends and family for any travel via mass transit. You must enroll in the TransitChek Program in order to share the benefit. If you are already enrolled but do not deduct the maximum $230 cap per month, you may need to increase your benefit amount in order to share the benefit. Only the transit benefit can be shared with friends and family – sharing the parking benefit is not permitted.
Please note that you should first check with your Benefits Administrator to make sure that your company’s plan permits this change.
Q. Do I need to call Customer Service if I currently have a pretax amount of $120 and a post-tax amount, as well?
A. No, TransitCenter will automatically increase your pretax amount to include the post-tax amount. For example, if you have a post-tax amount of $80, your entire pretax amount will be changed to $200. We will do this for any pre and post-tax amounts up to the new limit of $230. If your current commuting amount is above $230, your post-tax amount will be adjusted as well, so that the total amount of your commute remains the same.
Q. My company offers the transit benefit as a fringe. Are they required to increase the benefit to $230?
A. No. Your company has the option to set the limit as it deems appropriate. (In San Francisco, special rules apply. Please check with your employer.)
Q. How do I find out if my company is changing the fringe benefit limit?
A. You must contact your Benefits Administrator or Human Resources representative.