Urgent Update on Status of SmartBenefits®

Starting January 1, 2011, SmartBenefits commuters could lose up to $1,300 per year in transit benefits because of two changes being made by the Federal government:

• The maximum monthly transit benefit allowed by federal law will decrease from $230 to $120; and
• Commuters will no longer be able to use their transit and parking benefits interchangeably as Metro begins to phase in an Internal Revenue Service (IRS) mandate that requires a separation of the parking and transit accounts for commuters.

Transit Benefit to Drop

In the National Capital region, 285,000 employees currently receive transit benefits. And at least 90,000 of these Metro commuters currently receive more than $120 per month.

During these tough economic times, a loss of transit benefits could cause a hardship for many area commuters, forcing them to drive to work, which in turn will add to the region's congested roadways.

It is important to note that employers also benefit from the pre-tax benefits provision with reduced payroll taxes, and by having a valuable employee recruitment and retention tool.

The increase in the benefit was originally provided through a provision of the American Recovery and Reinvestment Act (ARRA) to match the maximum allowable parking benefit of up to $230 per month.

Extending the benefit would continue the parity between those who commute by transit and those who drive and receive a parking benefit. If the benefit is not extended, the parking benefit will remain at $230 per month and only the transit benefit will drop to $120 per month, which is an incentive to put more people back in their cars.

IRS Mandate to Separate Parking and Transit Benefits

Metro is currently taking steps to comply with an IRS mandate that requires transit and parking benefits be separated into two different accounts.

Riders will be prevented from using transit benefits from parking (and vice versa).

More than 220,000 Metro customers will ultimately be impacted by this change, which will be phased through the spring as Metro makes needed programming change to its faregates and fareboxes in order to comply with the IRS regulations.