DataPath 132

Since a Section 132(f) Tax-Free Transportation Plan benefits both the employer and the employees, it is not a hard sell to convince an employer to install a plan and the employees to participate.

EMPLOYER BENEFITS:

Employers today are looking for new ways to improve benefits with minimum or no cost. By providing a Section 132(f) Tax-Free Transportation Plan, the employer can provide a new benefit for the employees that will not cost the employer anything; in fact, it will benefit the employer as well!

Save on Payroll Taxes!

The employer will save money on payroll taxes since the employees do not pay FICA for expenses qualified under a Section 132(f) Tax-Free Transportation Plan. This means that the employer does not have to pay the FICA match.

For a company with 50 employees deducting $180 a month each, the employer's savings on FICA would be $165 per employee per year. That works out to $8,262 savings per year for the employer!

If the employees elect $65 a month for transit pass and vanpooling expenses and $180 for parking expenses for a total election of $245 a month, the employer savings for each employee would increase to $225 per employee per year. Under this scenario, the employer saves $11,244 annually on payroll taxes!

Improve Employer-Employee Relationships!

Today's employees want and expect fringe benefits. A good benefit program can attract new employees, prevent employee turnover, and maintain high employee morale.

Show the Employer How Profitable a Plan Can Be

DPI132 produces a Preliminary Proposal, based on the employer's actual figures, illustrating the potential savings for the employer. All you have to do is enter the employer name in the system and, on the Plan Design/Estimate screen, estimate how many employees will participate, how much they will elect, and the percentage of payroll taxes that will be avoided. Then print the Preliminary Proposal to show the prospect.

EMPLOYEE BENEFITS:

Employees do not have to pay federal payroll taxes on elections under a Section 132(f) Tax-Free Transportation Plan. In some states, the elections are also exempt from state and local payroll taxes.

If an employee deducts $180 a month for parking expenses at 25% Federal and 7.65% FICA, the employee's take-home pay could be increased by $58.77 a month or $705.24 a year. Even if the employee only deducted $100 a month, the employee could save $391.80 a year.

If the employee chose to deduct $65 a month for transit pass and vanpooling expenses in addition to the $180 a month for parking expenses, the employee's take-home pay could be increased by $80 a month or $960 annually!

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