CBS Administrators

Benefits of a 132 Plan

Employers:
  • Provide new benefits at little or no cost
  • Easy to set up minimal paperwork
  • Payroll, business income taxes reduction

    • Employers:
  • Reduces commuting expenses
  • Flexibility online enrollment for commuter benefits
  • Reduces personal income taxes


    • Frequently Asked Questions

    CBS Administrators is committed to the success of your benefits program. We are here to help and to be a resource to you and your employees.

    We understand there may be a variety of questions when offering a new benefit or switching administrators. Take a look at our answers to some of the most frequently asked questions below and reach out to us so we may help be a part of our companies’ solution.

    • Transporation and Parking Benefit FAQ (Section 132)

    Transit Reimbursement Account

    The Transportation Equity Act for the 21st Century (Internal Revenue Code Section 132 and TEA-21) allows employers to offer employees the opportunity to set aside a portion of their salary to pay parking and mass transportation expenses. The employee will not be taxed on amounts set aside and used for qualified expenses.

    How it Works

    The transportation fringe benefit is similar to the pre-tax flexible spending accounts available for medical expenses and dependent care without the “use it or lose it penalty”. Employees can elect up to $240 per month for eligible parking expenses or up to $125 per month for Mass transit expenses. The funds are
    disbursed to the employee through the use of vouchers, smart-cards or transit passes.


    Qualified Expenses

    • Local Parking - Parking a vehicle in a facility that is near the employee’s place of work.
    • Park and Ride - Parking at a location from where the employee commutes to work (for example parking costs at Mass Transit stations).
    • Mass Transit - Eligible Mass Transit expenses include tokens, passes, smart cards or fare cards for trains, streetcars, vanpools, busses, subways or ferries.

    Increase Your Take Home Pay

    With pre-tax deductions, you keep more money in your paycheck. Your increased take-home pay and savings depend on your income tax bracket. If you are in a 30-percent tax bracket, you can save $30 for every $100 that you put into the commuter plan. Put $1,500 a year into your commuter benefits plan, and you increase your annual take-home pay by $450.


    Sample Employer Savings

    A1 Company (25 Employees)

    Without a

    With a

    132 program

    132 program

    Annual payroll

    $

    1,000,000

    $

    1,000,000

    Transit Expenses

     

    0

    $

    15,000

    Parking Expenses

     

    0

    $

    28,800

    Taxable Payroll

    $

    1,000,000

    $

    956,200

    FICA Tax (7.65%)

    $

    76500

    $

    73149

    Savings

    0

    $  3,351

    Note: Actual savings may vary depending upon specific tax situation. Social security benefits could be affected.
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