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These SmartBenefit changes are baffling

At least, to me. But some readers already are starting to comment on this. They saw announcements on other blogs, including UnsuckDCMetro and DCist.

Here's the announcement on Metro's Web site they were reacting to.

Today, Metro sent out more information about the changes, which take effect Jan. 1. The transit authority says the changes are necessary to help employers comply with new IRS rules requiring that transit benefits be disbursed and monitored separately from other value stored in their employees' SmarTrip cards.

So transit benefits and parking benefits need to be stored in two distinct electronic accounts in a central location. The card itself will store only value directly added by the employee, Metro says.

The good-sounding part for riders is that they won't have to line up each month at the vending machines to add the SmartBenefits value to their SmarTrip cards. That will happen automatically as they go through the fare gates or tap the fare boxes on buses.

The maximum value that a rider can add to a card will remain at $300. Then this new category, the centrally stored value of transit and parking benefits from SmartBenefits, will be limited to $230 each. (IRS rule for 2009: "Employees may exclude from income $230 per month in transit benefits and $230 per month in parking benefits -- up to a maximum of $460 per month. Employees may receive benefits for commuter transportation and transit passes and benefits for parking during the same month; they are not mutually exclusive. These qualified transportation fringe benefits are excluded from an employee's gross income for income tax purposes and from an employee's wages for payroll tax purposes.")

Up to this point, it doesn't sound like much to worry about. In fact, it sounds helpful. But here's the part riders are focusing on: At the end of each month, any unused benefits will be credited back to the employer. Metro says employees who contribute a portion of their pre-tax salary to the SmartBenefits program should contact their employers to determine how the employer will handle any unused portion of their pre-tax contribution.

Metro is going to sponsor some seminars for employers on how to deal with this. How about some seminars for the private employees who use SmartBenefits? We're talking about their money.

Here's the other downer in the Metro announcement: Because of the need to focus on complying with the IRS rules, Metro says, it has to delay other upgrades. That includes the upgrade -- so long awaited by many of you -- to make bus and rail passes available on the SmarTrip card or to let riders add value to SmarTrip cards online.

So the deadline for those services continues to slide. Instead of having them by the end of this year, it's likely to be fall 2010.

This is not good. It's just going to cause more confusion and anger among riders. They'll be confused at first. Then when they realize what's happening, they'll be angry. I wish Metro would consider this in the context of what it's trying to achieve regarding the long-term health of Washington's transit system. Metro needs us to understand the system's financial needs, and perhaps the need to support a fare increase and an increase in taxpayer-supported subsidies to the transit authority.

Fat chance understanding those high finances at the same time we're trying to figure out our fare cards.

By the way, those seminars for employers to learn about the new program are scheduled for Nov. 4, Dec. 2 and Jan. 12 at Metro headquarters. Tell me: When you ask your employer to change your SmartBenefit contribution, how long does it take your employer to implement the change?

This is the Metro communication problem all over again.

By Robert Thomson  |  October 27, 2009; 1:33 PM ET
Categories:  Metro  | Tags: Dr. Gridlock, Metrobus, Metrorail, SmarTrip, SmartBenefits  
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Ok, what about people who leave their jobs and earned the amounts on their Smartrip cards? Do they lose all that??? Doesn't make a lot of sense.Just confusing..

Posted by: PeteHallsMom | October 27, 2009 1:57 PM | Report abuse

From Dr. Gridlock: Lena H. Sun, who covers Metro transit for The Post, is working on a story about the new SmartBenefits plan. I'll post a link to Lena's story as soon as it's available.

Posted by: rtthomson1 | October 27, 2009 2:00 PM | Report abuse

My employer doesn't contribute to my SmartBenefit fund - it is all MY money. The benefit is that it is pre-income-tax money. And I often run a month to month balance because some months have more work days than other months. Why would Metro give MY money back to my employer?

Posted by: jcflack1 | October 27, 2009 2:22 PM | Report abuse

I'm in the same boat as jcflack1, and further I have to let my employer know the 9th of the previous month to adjust the funds I will collect on the 1st of the month (for instance, I have to tell them to change it by January 9 to pick up more benefit on February 1).

Further, I go to work different ways sometimes (depending on plans, I may take the bus to the Metro, take the train to my work, and then take the train to another stop to have a friend get me for evening plans -- technically I'm still commuting when I go out to meet the friend to pick me up). Or I work late, so my fare goes down. All of this is going to make a net result in underestimating the amount I will use on the benefit, which means I can't take full advantage of this the way it was intended. I understand this is probably to prevent abuses, but there has got to be a better way!

Posted by: | October 27, 2009 3:11 PM | Report abuse

The reason they are doing this is simple - to MAKE MORE MONEY.

If you put $80 on your card for the month and there is a holiday, you might have a few bucks left over. You then might use that money to the subway on the weekend, God forbid.

This way you'll have to pay for those weekend rides, and Metro will get more money.

The IRS excuse is a smokescreen.

Posted by: crw3 | October 27, 2009 3:32 PM | Report abuse

I'm really annoyed about this. I've read it over three or four times and basically every time I do I come to the conclusion that this will cost me extra money out-of-pocket most months, and that somewhere along the line, in a month without many work days (like a December), somehow my "refund" will get "lost" between the WMATA, my employer, and me, and so I will also end up forfeiting whatever I paid pre-tax.

I'm glad at least that I'm not the only person who read that press release and said, "wait, what?" but this is just another example of why I kind of wish I hadn't moved to DC. I suspect 2010 will be the year I start driving, because my fare will probably end up being $4 or more each way and my "green / sustainable urban living" commitment has to have a breaking point...

Posted by: EtoilePB | October 27, 2009 3:40 PM | Report abuse

I don't get this either. My Smartrip money is a combination of employers' and mine... are they going to pro-rate? This reminds me of the companies who try to get their employees to "return" their frequent-flier miles to the company.

btw, my organization asks for us to submit changes by the 15th for the next month.

Posted by: justme22 | October 27, 2009 3:46 PM | Report abuse

To be fair to Metro, they are not keeping the money. Any unused benefits will be credited back to the employer. The issue for employers is if you provide those benefits on a pre-tax basis, do you have to refund those monies to the employee.

I'm totally confused by Metro's position, because documentation I've read states that the Qualified Transportation Fringe Benefit is NOT a cafeteria plan and NOT subject to a "use it or lose it" rule. IRS documentation states that unused monies can in fact be carried over from month to month: - states "Treasury Regulation section 1.132-9, Q/A-15 provides that an employee may carry overunused compensation reduction amounts to subsequent periods pursuant to the employer’s compensation reduction arrangement

This is placing a real burden on people who process payroll. While an employer has the flexibility to design a plan the way they want, the question comes down to whether or not we are REQUIRED to refund unused benefits. I attended the October 20th SmartBenefits seminar and can tell you that there were very heated discussions regarding this new provision.

Posted by: bdk64 | October 27, 2009 3:48 PM | Report abuse

How will this affect us who have CommuterDirect pull ou rmoney for MARC tickets? Will they automatically pull it form pre-tax dollars or do I have to inform them of this?
I love how Metro waits until the las tminute to announces changes that will be headaches for its customers, CommuterDirect and HR offices all over the Metro area.
I've defended Catoe all along; however, there is no excuse here. The board should meet again pronto and fire him for this.
Metro needs to realize that a much larger world outside of theirs exists!

Posted by: GlenBurnie | October 27, 2009 4:04 PM | Report abuse

It's too late for me to change it for November; I'll have to do something within the first week of November to change withholding for December.

None of the money on my card is employer-contributed; some of it is my pretax money and some of it is "personal" post-tax cash I added at fare card machines. How is Metro going to sort that out?

And how is it going to decide which "purse" (pre-tax Smart Benefit transit purse or "personal" transit-or-parking purse) to take money out of when I go through a turnstile?

Posted by: dc-native | October 27, 2009 8:00 PM | Report abuse

I don't understand this at all. How will it separate my work's smartbenefits from my personal purse? If I come home late or work on a Saturday, is that coming out of my personal purse?
What about the money that's left on my card on December 31 (employer + my own money), is it going all to my employer?

If done right, this might make it easier for me to return my money to my employer (government subsidized, not pretax money). Before I had to stand at the machine making my deductions for the month.

Posted by: ashdaleuf | October 28, 2009 8:43 AM | Report abuse

My company uses WageWorks to handle transit benefits. We have to make changes by the first of the month before the benefit (i.e. make changes by Nov 1 for December 1 benefits). However last time WageWorks needed to make major changes, when the stimulus bill increased your maximum pre-tax amount, we were a month behind the system. The benefit was available in March, but we couldn't take advantage until April. What happens if WageWorks can't accomodate the SmarTrip changes by Dec 1 (to go into effect Jan 1) and we don't have the ability to identify separate amounts for transit and parking? Will my money disappear? Will it all go into transit? Will it go into the personal purse? Will my money from December still roll over or not? Monday January 4th is going to be a mess.

Posted by: ckstalk | October 28, 2009 9:22 AM | Report abuse

How about the card balance accumulated in 2009? If it is not used by the end the Jan. 2010, it will go to my employer?

Posted by: mdsir | October 28, 2009 9:46 AM | Report abuse

Having attended the 10/20/09 seminar:

1) Any funds on your SmarTrip card as of 12/31/09 will be stored in the personal purse, including any 2009 transit or parking benefits.

2) The system cannot differentiate between personal & commuter travel. Effective January 1, 2010, transit fares will always be pulled from available transit benefits. Once those benefits have been depleted in a given month, the fare will be pulled from the personal purse.

3) Because the transit & parking benefits are not actually stored on your SmarTrip card and due to screen size limitations, the faregates will only display the balance of your personal purse, so you won't know how much you have left in your transit purse. The passes/farecard machines may be able to display more information, but I can't imagine someone swiping their card at a faregate, then going over to the farecard machine to check their balance. The Metro spokespeople said that they hoped to have the SmarTrip website operational in January (subject to change), where customers could view their balances & activity. I don't know if this part of the website design is being delayed, as has been mentioned in their press release.

4) If you currently assign your SmartBenefits to a vanpool or something like CommuterDirect, nothing is supposed to change. Presumably, your total monthly benefit is being assigned to those vendors, so there wouldn't be the issue of not using all your benefits in a given month.

Posted by: bdk64 | October 28, 2009 10:10 AM | Report abuse

A perfect example of how not to use the English language. I read the Express article this morning, Metro's press release, Dr Gridlock's article, and the blogs above.

If bdk64's research is correct and this is not a 'use it or lose it' plan - then how can Metro impose something contrary to IRS regulations?

Personally, I've cancelled my pre-tax allocation for Smartrip and will revert to paper tickets until this is sorted. I can only imagine the chaos and frustration that will occur if this isn't done right. I'm bailing out now.

Posted by: | October 28, 2009 12:00 PM | Report abuse

@bdk64 - But the question is how is the "system" determining the allocation of funds between the parking purse and the transit purse, if all funds are just lumped together now? So will all employees have to re-sign up for SmartBenefits to differentiate between the two. I don't get it...

Posted by: dst597 | October 28, 2009 2:46 PM | Report abuse

Several layers of confusion here.
1) "Then this new category, the centrally stored value of transit and parking benefits from SmartBenefits, will be limited to $230 each. (IRS rule for 2009: "Employees may exclude from income $230 per month in transit benefits and $230 per month in parking benefits -- up to a maximum of $460 per month." I thought it was $115 a month for everything. So this is changing and Jan 1, 2010, it's $230 for transit and $230 for parking for a total of $460? This is great if my employer will go for that increase.
2) "So transit benefits and parking benefits need to be stored in two distinct electronic accounts in a central location. The card itself will store only value directly added by the employee" - So I have to use the card to go through the gate, but the addition and subtraction of benefits used is no longer reflected in the window at the gate - that's only the personal stuff on the card? I have to check a web site to find out if I have enough benefits on the card to get home?
3) From a commenter "The system cannot differentiate between personal & commuter travel. Effective January 1, 2010, transit fares will always be pulled from available transit benefits. Once those benefits have been depleted in a given month, the fare will be pulled from the personal purse."

It really sounds like everyone needs TWO cards, one for work tied to SmarTrip benefits and one for personal travel with funds loaded at the stations. (I have that now but have to add personal funds to the SmarTrip benefits when I use them before the month is over).

Posted by: sue-b | October 29, 2009 11:44 AM | Report abuse

@dst597: Right now, your SmartBenefits transit & parking amounts are being lumped into one purse on your SmarTrip card. During the month of November & December, when you swipe your card at a faregate, code is supposed to be downloaded to your card in advance of the transit type segregation. Effective January 1, 2010, rail & bus fares will be deducted from the amount in your "transit purse" and Metro lot parking fees will be deducted from the "parking purse." If there is no value in either of those purses, monies will be pulled from whatever value is stored in your personal purse.

You will have to calculate how much you need for transit & parking separately and provide that information to your employer. They will then set up individual transit & parking amounts via SmartBenefits. IF YOU DON'T HAVE ANY MONEY IN THE PARKING PURSE OR THE PERSONAL PURSE, YOU WON'T BE ABLE TO GET THROUGH THE GATES.

Posted by: bdk64 | October 30, 2009 10:04 AM | Report abuse

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