Parking: Qualified Transportation Benefits Program

Purpose

This document describes the Qualified Transportation Benefits Program (QTB), including eligibility, program cost, and implementation instructions.

Background

The Research Foundation Qualified Transportation Benefits Program (QTB) allows an employee to pay for work-related parking expenses on a pretax basis. Under this program, parking expenses are not reflected as part of an employee's reportable earnings, for purposes of federal and state income tax, as well as Social Security and Medicare tax. This program is made possible under Section 132 (f) of the Internal Revenue Code (IRC).

Parking deductions are taken on a 24 pay period basis. No additional parking deductions are taken for those months in which there is a third pay day.

Eligibility

All employees who pay for work site parking through payroll deduction are eligible for pretax qualified parking expenses of up to $230 per month for 2009 (the IRS adjusts this figure annually as needed for inflation). Operating location parking expenses that are currently remitted through payroll deduction are eligible under this program. There is no waiting period.

Program Cost

Employees pay the full cost for work site parking based on the prevailing rates at their location. This payment can either be on a pretax or after-tax basis. Participation in this program will not affect the amount of basic retirement plan contributions, life insurance, or disability insurance.

Pretax

The amount withheld from earnings to pay for qualified parking is excluded from gross reportable income. Because taxable income is reduced, a QTB participant will have lower tax withholdings and higher take- home pay. However, because Social Security income credits are reduced by the amount of the parking expense, QTB participation may reduce a person's future Social Security benefits.

After-tax

The amount withheld from earnings to pay for qualified parking is included in gross reportable income. Because taxable income is not reduced, Social Security income credits are maximized. Employees should consult their financial advisor if they are concerned about how participation in this program could impact their Social Security benefits.

What to Give Employees

Parking deductions will be taken on a pretax basis unless the person waives participation. New employees should be given the program summary and attached participant waiver form entitled "Qualified Transportation Benefits Program Information and Waiver of Pretax Parking Deduction." This handout is available in both PDF and Word format.

If the employee authorizes payroll deduction for parking expenses and...

then the operating location should...

Work Instructions to Use

does not submit a participant waiver form

1. Go to the Element Entries - xxxx window in
the employee's record.

2. Add the pretax parking element for that
location (i.e., PrePrk xxxx, where xxxx is unique to the operating location).

Note: The Effective Date should be the start date of the new employee or the first day of the next payroll period.

To enter the new recurring element, refer to one of the following work instructions:

"Enter a Recurring Earnings or Deductions Element"

"Enter a Recurring Element to Enroll a Regular Employee in a Benefits Plan"

"Enter a Recurring Element to Enroll a Graduate Student Employee in a Benefits Plan"

submits a signed and dated participant waiver form

1. Go to the Element Entries - xxxx window in
the employee's record.

2. Add the after-tax parking element for your
location (i.e., Parking xxxx, where xxxx is

unique to the operating location).

Note: The Effective Date should be the start date of the new employee or the first day of the next payroll period.

needs to change from pretax to after-tax, or vice versa in accordance with the program rules

1. Go to the Element Entries - xxxx window in
the employee's record.

2. Date track to the end of a pay period.

3. End date one element (i.e., PrePrk xxxx,
the pretax element, or Parking xxxx, the
after-tax element).


4. Date track to the beginning of the next pay
period.


5. Enter the new recurring element (i.e.,
PrePrk xxxx or Parking xxxx).

To end date the current element, refer to one of the following work instructions:

 

"Change a Recurring Earnings or
Deductions Element"

"Change Benefits Enrollment"

 


To enter the new recurring element, refer to the work instructions listed in the previous cell of this table.

Responsibilities

Operating Locations

Operating locations should have a procedure in place that allows employees to provide written authorization for any optional payroll deduction such as parking expenses. Part of that procedure should include informing employees about the Qualified Transportation Benefits Program. Refer to the section "What to Give Employees."

Operating locations are responsible for input of these deductions, refer to the Benefit Processing Administrator Guide.

Employees

Unless the employee signs the Waiver of Pretax Parking Deduction, any parking expenses allowed by the employee through payroll deduction will be from his or her gross income on a pretax basis.

Change History

 

 

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