| Transit Program Overview |
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PayFlex is a nationwide commuter benefits provider who works exclusively with employers to offer their employees pre-tax transportation benefits under legislation known as the Transportation Equity Act for the 21st Century, or IRS Code Section 132(f). Section 132(f) allows employees to use pre-tax dollars to pay for the costs associated with their commutes to work through an employer-sponsored program and up to certain monthly limits. The 2007 limits are $110 per month for the transit side of the benefit (public transportation and vanpooling) and $215 per month for parking expenses. IRS regulations stipulate that after January 1, 2004, this benefit should no longer be managed through a reimbursement process. In order to be in compliance, employers need to offer a fare card/voucher solution for transit benefits wherever vouchers are readily available. The PayFlex program is an online ordering platform that is accessed by employees through a single sign-on process. It allows participants to access a comprehensive catalog of transit authorities and parking facilities nationwide to order their desired media (fare passes, vouchers, direct parking payments, etc). Product availability varies by greater metropolitan area and is dependent upon the specific types of products that the local transit authorities make available. Escalating gas prices coupled with environmental concerns have employees looking for options to assist in their daily commute. Currently, only 14% of employer’s provide a tax-free commuter benefit program to their employees. Depending on their tax bracket, employees can save up to 40% on their commuting costs while employers save 7.65% on every dollar set aside for transportation and parking. Employee Savings Example: You park and ride, paying $95 for your train ticket and $175 for your parking pass monthly. Your combined tax rate is 35%. You save over $33 per month on your train ticket PLUS another $61 per month on your parking expenses. That's a savings of almost $100 every month! Employer Savings Example: 500 participants (under the FICA limit) spending $110 each per month on their commute. 500 x $110 x 7.65% = $4,125 savings per month, or $49,500 savings per year! In addition to the financial benefit, employers could also realize:
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