Purpose

To inform agencies of the change in the pre-tax transit benefit deduction limit as a result of the American Recovery and Reinvestment Act (ARRA).

Legal Reference

The American Recovery and Reinvestment Act (ARRA) includes changes to the monthly exclusion for qualified transportation fringe benefits. This qualified transportation fringe benefit is excluded from an employee’s gross income for Federal income tax purposes and from Social Security and Medicare taxes. Under ARRA, the federal government has increased the monthly pre-tax transit benefit amount from $120 to $230. The increase was effective March 1, 2009.

Background

The Governor’s Office of Employee Relations (GOER) administers the pre-tax transportation benefit (NYS-Ride) for employees in companies other than CUNY.  Payroll deductions are taken using Deduction Codes 421 (NYS-Ride Pre-tax) and 422 (NYS-Ride Post-tax).

CUNY administers the pre-tax benefit for CUNY employees. Payroll deductions are taken using Deduction Codes 438 (CUNY pre-tax transit benefit) and 439 (CUNY post-tax transit benefit).

The deductions had been taken for the benefit months of March and April before the pre-tax limit was increased. OSC will, at the request of GOER and CUNY, make adjustments to the distribution of the pre- and post-tax deduction amounts for these months, allowing employees the full pre-tax transit limit allowed ($115 biweekly).

Affected Employees

Employees participating in the NYS-Ride Transportation Benefit Program or CUNY Transit Benefit Transportation Spending Account for benefit months March and/or April 2009

Effective Date(s)

Administration paychecks dated December 23, 2009
Institution paychecks dated December 31, 2009

OSC Actions

OSC will automatically adjust the distribution amount of the deduction between the pre- and post-tax deduction amounts ensuring all participants receive the maximum pre-tax monthly benefit allowed.

Note: This impacts only employees who had both pre- and post-tax deductions and participated in the program for the benefit months of March and/or April.

Agency Actions

Agencies must inform affected employees participating in the NYS-Ride or CUNY Transit Benefit Transportation Programs.

Questions

Payroll-related questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.

Questions regarding the NYS-Ride Transportation Benefit Program may be directed to 518-473-8091.

Questions regarding the CUNY Transit Benefit Transportation Spending Account may be directed to 1-866-399-1494.