Governed under Section 132 of the Internal Revenue Code, QTAs help you and your employees save money by using tax-free dollars to pay for certain transportation and parking expenses. For many employees, the cost of parking and train or bus tickets can add up to a substantial amount over the course of a year. QTAs provide employees with a practical way to decrease their daily transportation costs as well as a great incentive to arrive at the office on time every morning. Employees have the option of participating in one or both of the available plans.

How a QTA Works

An employee selects a contribution amount before the plan year starts, and the contribution is set aside to pay for eligible transportation expenses. Those expenses are paid for by using tax-fee dollars, which in turn lower an employee's monthly taxable income and subsequently, the employer's monthly payroll tax. The employee then submits substantiation of their eligible expenses to eBenefits Administrators for reimbursement.

Benefits

QTAs benefit employers and employees in several ways: Tax Savings Employers receive a social security (FICA) tax savings of 7.65% on every dollar an employee contributes to the plan. Employees save on Federal income and FICA taxes, and the Federal tax savings can be as high as 30% with a total savings of up to 40% overall. Employees may also avoid state and local income taxes by participating in a QTA. Roll-Over Options The employer may allow 100% of funds to roll-over year after year, or they may allow a certain percentage, a set maximum amount or no funds to accumulate. The "Use-It-or-Lose- It" rule which applies to Flexible Spending Accounts (FSAs) does not apply to QTAs. Flexibility Employees can choose how much money they want to contribute as well as what options they want to participate in. In addition, employees have the option of making adjustments, terminations and contributions all on a monthly basis.

Plan Types

There are two primary types of QTAs, and employees may participate in one or both plans. It is important to note, however, that funds for the accounts are kept separate, and funds cannot be transferred from one account to another. In some cases, the monthly maximum contribution may not be enough to cover an employee's transit expenses, and post-tax contributions may be made. 1. Parking Reimbursement Account This plan allows an employee to deduct up to $240 a month from their paycheck to cover the cost of work-related parking expenses for parking their vehicle near the work place or in a parking lot from which they commute to by commuter highway vehicle or carpooling. Parking at or near the employee's home does not qualify. 2. Transit Reimbursement Account This plan allows an employee to deduct up to $125 a month from their paycheck to cover the cost of work-related transit expenses including transit passes and commuter highway vehicles. A transit pass is a pass, token, fare card, voucher or something similar that allows an employee to receive transportation on mass transit systems or a highway vehicle that has a seating capacity of at least six adults (excluding the driver) and is operated by a hired driver. (A hired driver is considered someone paid by a public or private company to drive commuters to their various destinations.) Transportation in a commuter highway vehicle, which is often called vanpooling, typically involves providing transportation between an employee's home and the work place. The vehicle must have a seating capacity of at least six adults (excluding the driver), and at least 80% of the vehicle's annual mileage is expected to be for work-related commuting trips. On commuting trips, the number of employees receiving transportation to and from work is expected to be at least half of the vehicle's adult seating capacity (excluding the driver).

Comprehensive Administration

eBenefits Administrators provides complete, comprehensive administration of QTA services. Our experienced team effortlessly navigates the complex world of QTAs, taking care of enrollment, account set-up, implementation, education, staff training and account administration. Before a QTA is implemented, we make certain the plan passes discrimination testing as required by the IRS. We perform this testing throughout the year to account for the addition and deletion of employees for consistent plan maintenance. We also provide an employer with all the necessary legal documentation they need to ensure the plan is IRS compliant as well as a variety of reimbursement options. Contact us today to learn more.