Correction to This Article
This article about the Internal Revenue Service-ordered separation of transit and parking funds in area commuters' SmartBenefits accounts incorrectly described an extension that the Washington Metropolitan Area Transit Authority was granted for implementing the change. The extension was until Jan. 1, 2011, not Jan. 1, 2010.

Metro commuters could lose unused transit funds

By Ann Scott Tyson
Friday, November 26, 2010

Metro customers using SmartBenefits could face the loss of unused funds on their cards at the end of each month starting next year, depending on how their employers decide to implement a change in the benefit program.

Under an Internal Revenue Service mandate, transit and parking benefits will have to be separated in SmartBenefits accounts. The new program will require the estimated 220,000 commuters who receive both transit and parking benefits to decide how much pre-tax income they want to set aside monthly for each type, according to Metro spokeswoman Lisa Farbstein.

Employers will then decide whether any unused benefits will carry into the next month or fold into the employer's treasury, she said.

"The decision on whether the benefits roll over or are credited back to the employer are decisions to be made by each individual employer, not by Metro," she said in an e-mail.

The commuter benefit program, known at Metro as SmartBenefits, allows employers to provide workers with a tax-free or pre-tax transit benefit, currently set at up to $230 a month for transit and $230 a month for parking. Federal employees receive subsidies of the same amount. In 2006, the IRS ruled that the accounts must be kept separate beginning in 2008, but granted a two-year delay. Late last year, Metro requested and was granted a further extension, until Jan. 1, 2010, to implement technology and work with businesses and employees, who had sharply objected to the possibility of forfeiting money deducted from their paychecks.

Metro will gradually transition employers to the program through the spring, giving them four to six weeks' notice before the change, Farbstein said.

Commuters will no longer have to download benefits monthly at Farecard machines. Instead, when they tap their SmarTrip cards at the rail faregate, bus farebox, or parking location, the payment will be automatically processed from the appropriate account.

The change is further complicated because the transit benefit is set to decline to $120 Jan. 1 unless Congress acts. It was increased to equal the parking benefit as part of the American Recovery and Reinvestment Act, which expires Dec. 31.

A rider who spends $135 a month on rail fare and $95 parking at Metro lots, maxing out current benefits, will soon have $120 of his rail costs covered, and all of his parking - for a net loss of $15 in benefits. Those who take long rides during rush hour, but don't park, will be harder hit.

About 170,000 federal employees and 115,000 private employees are registered for SmartBenefits.

© 2010 The Washington Post Company