Tuesday, October 20, 2009

Big Changes Coming to SmartBenefits

UPDATE

From Catoe's online chat Nov. 6:

Arlington, VA: Good afternoon - I have a question regarding the upcoming changes to SmartBenefits. Do we know yet what will happen to the current balances on our SmarTrip cards? For instance, if I have a $100 balance on the card beginning Jan 1, what "purse" will that money go into?Thank you!

Reply: Hi Arlington. I see a few questions about SmartBenefits here in the queue. Over the past couple of weeks, we have heard a lot of comments from customers about this change in SmartBenefits. I've decided that we need to rethink the changes that we are making. At this point I do not have any new details to share. I hope to be able to provide more detail about the program in the coming weeks that will be able to clarify these sorts of questions. Rest assured, I have heard what people have to say and your comments will be taken into account as we develop the plan moving forward.

--
Metro is making some big changes to SmarTrip (correction SmartBenefits) in 2010.

First, your monthly benefit will be added at the faregate, bus farebox or parking target.

Second, money on your card will be divided into "purses" or sections, one for transit, one for parking and one for personal money you may use to supplement your benefit.

Third, your monthly benefit will no longer roll over, but any remaining balance will be sent back to your employer. Obviously, this wouldn't happen to money in your personal "purse."

According to Metro, the changes are being made to "comply with IRS mandates to better control the allocation of transit and parking benefits."

FROM WMATA:
With this new change, any funds, whether it be employer benefit or employee pre-tax dollars that are left at the end of the month will be returned to the EMPLOYER. It is then the employers option on what to do with this money. It is extremely important for employees who contribute pre-tax dollars to their benefit to ensure they are not giving too much, as well as to discuss with their employer what happens with any returned funds.

Photo: mr_t_in_dc

54 comments:

Terry Carter said...

Anything to confuse riders.

J.D. Hammond said...

Is this for real? Is my SmarTrip about to become an Octopus Card?

Zack said...

Well, at least they're trying something new, anyway. What we could really use in addition to this is the ability to add day or week passes to the card. I only metro about once a week or so, but on the days when I intend to do a lot in the city, it'd be nice if I could enjoy the benefit of a day pass without creating the extra waste and risk of loss associated with buying one, when I've *already got* a permanent card.

Maybe we can even sneak a discount on the passes in there if the pass is distributed on a card...

michelle said...

"Third, your monthly benefit will no longer roll over," Monthly benefit or balance? I am confused. My benefit is taken out as pre-tax dollars from my paycheck... would that mean its going back to my employer and then i'll get it in my next check?? or is this only in cases where the employer is paying for part (or all) of the benefit (ie Fed Govt)??

Anonymous said...

This sounds ridiculous. I have $120 of my pre-tax dollars taken out and put into SmartBenefit through the federal transit program. So it's my money, not my employers, and they are going to remove my money from my SmartTrip card and send it back to my employer exactly why?

Asshats.

Anonymous said...

would assume under that scheme your money would be in a personal purse

Anonymous said...

@Zach

WMATA (and other regional transit providers) is working on a pass capability for SmarTrip cards.

Currently SmarTrip cards are using the Nextfare4 software system. One regional transit agency has already begun testing Nextfare5, and one Metro station was used to test the system. [That station test didn't go so well - any SmarTrip card used at the faregates broke and could no longer be used on regional buses (not sure if it affected the ability to use the card on WMATA trains/buses).]

Right now, Nextfare5 is designed to work exactly like Nextfare4 until it has been sufficiently tested and everything works properly. In the future, it will be able to handle passes. Off the top of my head, I can't remember if they will start testing with weekly or monthly passes.

Long story short - passes are coming, but don't hold your breath.

Anonymous said...

Correction to previous post: Most if not all regional transit systems have switched over to Nextfare5 now; but Nextfare5 is still operating exactly like the old system, with the exception of some limited testing.

WMATA said...

With this new change, any funds, whether it be employer benefit or employee pre-tax dollars that are left at the end of the month will be returned to the EMPLOYER. It is then the employers option on what to do with this money. It is extremely important for employees who contribute pre-tax dollars to their benefit to ensure they are not giving too much, as well as to discuss with their employer what happens with any returned funds.

Anonymous said...

Wait - MY money is going back to my EMPLOYER...why exactly??

Anonymous said...

Wow. That is a really ridiculous way to treat funds that come from the employee pre-tax. When EXACTLY does that start? With January 2010 funds? Why is that money not simply put in the personal purse? It's very hard to exactly predict what amount will be used for business versus personal travel, with changing work schedules and flexible work-from-home days. This doesn't give companies much time to adjust their policies, and creates a big headache for them in dealing with returned funds.

Brian said...

That doesn't even make sense... how exactly does that do us any good?

Anonymous said...

The reason WMATA is doing this is because the federal tax benefit (pre-tax money for transit) is supposed to apply to money you use for commuting only. So you may be putting $120 pre-tax on your card every month, but if that isn't used just for commuting technically you are breaking the law.

Maybe the IRS is going after transit systems and trying to get them to crack down on this.

Anonymous said...

WMATA, and the IRS, can collectively suck my ass.

Anonymous said...

why is WMATA so determined to suck?

Anonymous said...

how will these purses work at the farecard machines/gates.. will i now have 2 or 3 lines of balances:
Bal 1 Employer$
Bal 2 My$
This will be confusing...

Anonymous said...

its theft. its part of my compensation. period. you take it back and give it to my employed ill file a police report against catoe for larceny.

Tanya S. said...

This is dumb. I've altered the amount withheld (for pre-tax benefits) every few months because the amount I use Metro varies. With this policy I'll have to underestimate significantly, thus making Metro a larger hassle and cost, thus ensuring I'll drive more to avoid the hassles. Brilliant, WMATA. Well done.

How is WMATA going to determine which trips are for commuting and which trips are personal travel to ensure the "right" (of my money!) is given to my employer?

WMATA said...

Here is the link to a presentation on the IRS guidelines. http://www.wmata.com/pdfs/business/SmartBenefits_IRS_October_2009.pdf

nevermindtheend said...

@Tanya S

My guess is WMATA won't determine which trips are for commuting and which are for personal use. They will probably use money from the commuting benefit "purse" until it is gone.

This would be fine for anyone who uses Metro for things other than commuting - or anyone who commutes enough to go through all of their benefits. However, anyone who only uses Metro for commuting and doesn't commute often enough to use all of their benefits would probably lose money.

Ultimately, I don't think it's a huge change. Anyone who took the full benefit out of their paycheck and then took Metro twice in a month probably didn't use those "roll over" benefits the next month, so they essentially lost the money anyway.

michelle said...

@wmata - what happens if my costs are not the same month to month? i live within walking distance to a metro station, but sometimes i drive to station or take bus....

michelle said...

@nevermindtheend - you are probably right. i forgot.. this is WMATA... they can't even figure out what is a mechanical diffculty and what is a derailment/crash!

Anonymous said...

I called WMATA and asked how the faregates will know which purse to deduct value from.

She said that the faregates will deduct value from the higher priority purse first. Purse 1 (transit purse) is higher priority than purse 3 (personal purse). So if purse 1 has value, it will be deducted. If purse 1 doesn't have value then it will deduct from purse 3.

Please call WMATA and confirm this for yourselves, I only heard this from 1 woman at WMATA. Who knows if it's the truth.

nevermindtheend said...

@michelle @4:27 Anonymous

That also matches the information in the presentation @wmata linked to. Everything comes out of the transit benefits purse first (for transit or parking) before it comes out of the personal purse.

Anonymous said...

due these include the monthly student farecards and DCOne cards?

Anonymous said...

Since 100% of the money on my card is mine, and they don't know who my employer is, they'll play hell catching it, unless they just take all the money left on my card and keep it for themselves, which will be totally sucky.

Ran Kailie said...

This is only going to make the metro more of a hassle. I figure out my expenses on a yearly basis then divide by 12. Some months are shorter then others but it will works out when the money rolls over.

I also only use metro for commuting, its useless for anything else basically. So what this means is I now have to figure out my commute cost on a monthly basis, average it then underestimate that value. Then each month I have to use non-pre-tax funds to pad out for the longer months?

How exactly does this help me? This screws me more then anything out of my pre-tax benefit.

Anonymous said...

So let me get this straight:
- I have an X amount of pre-tax transit money, which does not cover all my commuting costs (I always have to add more at the end of the month.
- If I get sick/take a vacation, I will have left-over money in my smartrip. I cannot roll it over to cover the next month's overage? It will be sent to my employer?
That's ridiculous!!!!

Anonymous said...

This does suck. I do not believe it is IRS as any law-breaking will easily be tracked back to the employee's company anyway.

MEANwhile, it also puts a burden on accounting. If the money is sent back accounting has to figure out how much is personal contribution, put it back in payroll and then backtrack to tax it. (Remember - it is pretax money.)

I know many companies that do not have staff who can do it, mine probably included.

End result - Thanks to Metro we may entirely lose the option to add personal pre-tax dollars to any company contribution. God help those who have no company contributions and rely solely on personal pre-tax deductions.

Anonymous said...

I just want to be able to add funds to my SmarTrip card online. Is that too much to ask?

Rebecca said...

This is so stupid. Usually I go through my commuiting SmartBenefits dollars, but this month I was out of town for two weeks on my honeymoon. When my money goes back to my employer, I know I'll never see it again. My employer barely cares about making sure our paychecks are correct, let alone reimbursing us extra dollars! Metro really sucks, especially compared to all of the nice European systems we used where trains came every 3-5 minutes ALL DAY LONG.

Anonymous said...

Can we put all of our money just into the personal purse, so that any excess rolls over every month? Do we have to have any money in purse 1 or 2?

I agree this is stupid, but if I can just put money in purse 3, even though I only use Metro for riding and never for parking, that seems like it would solve the problem. Or am I missing something?

ian.swank said...

Is it possible to transfer monies between purses? Say if, at the end of the month, I have $20 left in purse 1, the commuting purse. I don't want to lose that money, so can I just stick it in purse 3? Why must everything be so damn confusing on Metro? I have a wedding and honeymoon coming up in June, so I'll be out of the area for at least 2 weeks, so I'm definitely going to be losing money, unless my employer refunds it to me.

Maybe employers can credit returned money towards a future months' contribution? Say I have $100 taken out pre-tax per month. I only use $80 one month. Can they only take $80 out the next month, and use the returned $20 to make up the difference?

Anonymous said...

Employers probably can credit IF they have the staff AND time to add on this extra accounting work. Anyone know anyone at all who has extra time at work for more duties on their job-plate?

Another thought. There have been MANY MANY times the faregate did not correctly deduct the fare from the person in front of me. What if that corruption happens to ME and the "update process" doesn't hit my card. What if it hits the guy behind me and I see it happen. Do I tackle that fellow and call the cops about an accidental robbery? NO WAY that person would voluntarily mention they suddenly got a lot of free money on their card that doesn't rightfully belong to them.

The fare swipers at the gates are in a pitiful state. Now we must rely upon them for our FINANCIAL situation?????

Our company only does SmarTrip as Metro deliberately screwed up the farcards they'd send us every month (one month sending us over 70 $1 cards when we were expecting $10s). I can go back to paper cards if I want to give up my company help. If I give up the company help, I cannot afford to pay my mortgage and subway costs. I'll lose my job.

Anonymous said...

This also sucks for those whose employers pay their benefits, depending on how they calculate the amount to contribute. My employer works off a 20 work days/month formula. The average work month, though, has just under 21.1 workdays (deducting holidays). It all works out in the end, usually, given vacations and work-related travel. I think I ended up with a surplus of 2 or 3 days worth of commuting last year. Seriously, IRS? You really want taxes on that >$10 "scam?" No, you'd rather make me pay for approximately 2 weeks of commuting out of my own, after-tax pocket ('cause you know the vacation and travel will NEVER happen in the longer months). THANKS!

Anonymous said...

Don't blame this on Metro. The IRS is at fault. I have a feeling this will be just like the Healthcare Personal Spending accounts. You decided how much to add at the begining of the year, and if you don't use it all then you lose it. For all of you claiming "it's my money; giving the excess back to my employer is steal": that's not at all true. This is pre-tax money. The IRS is giving you permision to spend it on transit without paying taxes. Such situations usually come with a lot of strings attached (think 401k). The IRS usually requires that you plan ahead before deducting such money from your paycheck, and if you don't use it as planed then you forfeit it. That seems to be what is happening here. I agree that this really doesn't work on a month by month basis, but I think the actual implementation remains to be seen.

Anonymous said...

I agree that it adds unnecessary complexity, and I shudder to think how my combination of bus ride, Metro ride, and occassional parking will be calcuated, but the previous commenter is right. Not only do pre-tax contributions come with restrictions, but remember that your employer is matching your contribution: if you use your employer's matched dollars for noncommuting Metro travel, technically, you are stealing from them. Under the new system, they are getting back their money that you didn't spend, and so are you.

michelle said...

DCist is reporting there will be some type of flex account where you can move money between the transit and parking purses.....

http://dcist.com/2009/10/changes_on_tap_for_smartbenefits.php?hpid=webbuzz

Kara said...

Of course for those of us that are *gasp* environmentally concious (like metro wants us to be) and do not drive ....

Anonymous said...

How does it know the difference between personal and work travel? What if I come home late, will that fall under personal because it's outside of my usual commuting hours? Or what if I come in on a Saturday?

Anonymous said...

I attended the October 20th SmartBenefits seminar. Let me tell you, when they brought up the new provision of not letting unused benefits (as opposed to unclaimed benefits), this caused a firestorm.

I administer the transit benefits for my employer and we provide the benefit on a pre-tax basis. When I questioned them about the accounting nightmare that would ensue as a result of having to process refunds to employees every month, their response was that we (employers) don't have to give the money back. I don't think that's the case and I also question their position of the monies not carrying forward. All of the documentation I've found states that the Qualified Transportation Fringe Benefits are NOT a cafeteria plan and NOT subject to "use it or lose it" rules. Other documentation states that unused transit benefits can carryover to the next month:

http://www.irs.gov/pub/irs-wd/02-0003.pdf

http://www.irs.ustreas.gov/pub/irs-tege/fringe_benefit_fslg.pdf

http://www.irs.gov/pub/irs-irbs/irb06-47.pdf

Granted, I'm not a tax lawyer, but it seems to me that Metro is doing something that's contrary to the design of the program. While I can now go onto SmartBenefits to see who hasn't downloaded their benefits for a given month and send them a reminder notice, that won't be the case come January 2010. Since the transit & parking purses can hold up to $230 each and the personal purse can hold up to $300, the full monthly benefit will download to their card whenever they touch a SmarTrip target.

We're having to consult with a tax attorney to see if we are obligated to return unused pre-tax benefits to employees. I wish Metro would just furnish us with language that supports their position, rather than just saying that their General Counsel says they can do this.

Anonymous said...

When employers purchase SmartBenefits on behalf of employees who have payroll deductio ns for this purpose, can they direct that the funds be added to the "Personal" value on the SmarTrip card? Or can the "Personal" value be added to a SmarTrip card only at a machine in a Metro station?

Anonymous said...

How will the changes effect any money that might remain on a SmartCard as of December 31, 2009? Will that money then be returned to my employer, leaving me with a zero balance as of January 1, 2010?

Anonymous said...

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

Effective January 2010, SmartBenefits can only be directed to the "transit" purse or the "parking" purse. Until they roll out a SmarTrip web portal, you can only add value to your SmarTrip card at the Passes/Farecard machines or on the bus.

When you are going through the turnstile, the fare will be deducted from any available TRANSIT benefits. Once the benefits have been depleted, it will be deducted from your PERSONAL purse. The system can't determine whether or not your travel is of a personal nature or for commuting to your job - people work a variety of hours.

Anonymous said...

I just read through what the IRS has said on these issue, and there is absolutely NOTHING that says unused funds have to be returned to the employer at the end of the month (or the end of the year, or any time at all).

The other parts of the change do seem to be required by the IRS. But on the issue of returning unused funds, Metro appears to be using the IRS as a scapegoat for something they've decided on their own to do (perhaps because it simplifies their accounting).

This is ridiculous. The change really hurts anyone whose transit use varies from month to month. How do we stop this? Contact local politicians' offices? Bombard Metro management with complaints?

Anonymous said...

First, blame the federal workers who sold their extra Metrochecks that they got as a free benefit. Of course, that comes from the taxpayers' money. This abuse of the selling of the Metrochecks prompted a 2007 April GAO report:

http://www.gao.gov/new.items/d07724t.pdf

and after that, the IRS ruling that started this whole crap.

Get rid of the Metrochecks, that will solve a lot of the abuse. As for pretax remainder, I have also looked through the IRS rulings and associated items and I can't see where there is ANY ruling that the remainders go back to the employer at any time.

Tim said...

Me and my ADHD are going to just spend what's left on my card before the end of the year and then opt out of SmartBenefits. This is too much for me to keep track of and, when combined with the delays, accidents, broken escalators, and a (rumored?) impending fare increase, I'll just have to start driving again.

Anonymous said...

I work for the University of Maryland, which only processes SmartBenefits deductions during the 9-month school year (even for those who work year-round). The university's instructions for the SmartBenefits program say "If you are in need of a transit benefit year-round, then you should increase your deduction during the 20 pay periods to allow you to accumulate funds during the year for use during the summer months when there is no deduction or benefit."

Anonymous said...

A sane person will opt out of DumBenefits and move out of this hellhole of a city. But don't move to the west coast: California is contemplating charging insurance based on the miles you drive, Big Brother style.

So the Midwest is the final refuge. Montana looks nice.

Anonymous said...

Actually you can blame the people that have been signing up for more Smart Benefits so that they will have enough to cover parking. Transit costs can be pre-tax and parking can not. The IRS ruling is that Metro needs to be able to ensure that pre-tax transit benefits are not being used for parking. Also, it needs to go back to your employer because it was not used for transit therefore is needs to be taxed.

Anonymous said...

Well why not just give separate parking cards? Or, tell you what, just take debit cards or Visa in the parking lots like every other sane business model in the world.

This is a ridiculous plan Metro!
I am one of those people with no company contribution and only my own pre-tax dollars. Which are now going to be returned to my employer (which in itself has a hard time deducting the right amount and sending it the right employee card in the place, but that's another story) which has not yet decided what to do with it.

I can only imagine the nightmare that will ensure on the first commuting day of February. Lines of people getting stopped at the gates because what was left over from last month was removed from the card. Not that they will understand this--because the transit purse balance will never display on the gates anymore.

Hello Metro? Do you have any usability engineers on staff?? You do? Use them!

Anonymous said...

Let me just say that Metro is very uninformed about IRS rulings in regards to what employers can do with pre-tax benefits. Employers cannot simply issue refund on a pre-tax item. It is illegal!

Anonymous said...

I really think Metro did this to help federal employees/employers. Since feds get their cards as part of employment, they have no reason to legitimately care if the money on their card is returned. However, for people who pay for their own pre-tax benefits, this is a different story. They do care as it is their money. Metro forgot about the "little guy" and how it will affect those of us who pay for this from our own pocket.

Anonymous said...

This is an excellent way to reduce ridership.
I expect this foolshipness from government workers.

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