Executive Summary

In today's economic situation, employee benefits are a major topic. In an attempt to reduce operational expenses or just simply cope with skyrocketing service costs, many corporations are forced to either reduce or completely eliminate components of their employee benefits programs or significantly increase the share of an employee's contribution to such programs.

At the same time, the availability and quality of a company's benefits remains one of the major factors affecting an employee's morale and influences the decision-making process among job applicants.

In light of these facts, what if a particular company offered a benefit plan that costs nothing to the employees and allows them to receive a benefit of hundreds of dollars a year for what they are already doing every day - commuting to and from work? Consequently, what would be the company's associated costs and how easy would it be to administer the plan?

Commuter Account Plan is a federally regulated employee benefit program that allows its participants to make monthly paycheck deductions on a pre-tax basis up to a specific limit. Internal Revenue Code Section 132(f) allows employer-provided qualified transportation fringe benefits to be excluded, up to certain limits, from an employee's gross income. In 1998, the Transportation Equity Act for the 21st Century amended Code Section 132(f) to allow employees to make salary reduction elections for purposes of receiving tax-free employer-provided transportation benefits. This plan was finalized under Internal Revenue Service Regulation 1.132-9 Qualified Transportation Fringes.

Under the Commuter Account Plan monies can only be used towards qualified transportation or parking expenses. For transportation, the expenses need to be for associated mass-transit/vanpool services. For parking, the expenses need to be incurred at a parking facility at or near the place of work or mass-transit/vanpool carrier. However, the expense receipts, while desirable in case of audits, are not mandatory. Internal Revenue Service regulations specify that an employee statement that the expenses were used for qualified transportation or parking expenses generally will suffice. After the expense is incurred, an employee can claim reimbursement of a paycheck deduction in the form of a paycheck refund, a bank direct deposit or a paper check. There is no cost for employees to participate in the plan.

A business that offers the Commuter Account Plan to its employees also enjoys monthly savings on payroll expenses since the plan's pre-tax deductions eliminate the requirement for paying the FICA tax (up to 7.65%) on these amounts. There are also associated savings with the Federal Unemployment Tax. Furthermore, the plan is simple and straightforward and can be easily administered by a third-party benefits-administration vendor, such as TotalBen. TotalBen provides a true turnkey Commuter Account Plan without any overhead costs and at a flat-rate that does not exceed the plan's FICA payroll savings. As TotalBen does not charge for eligible but non-participating employees, the Commuter Plan becomes an employee benefit that is free to the client as well as its employees.

There is also a significant savings from which the employees can benefit. Payroll deductions for Commuter Account Plan are exempt from Federal, State and local taxes as well as FICA. This can add up to hundreds of dollars in savings annually.

What enables TotalBen to create comprehensive benefits administration solutions, such as the Commuter Account Plan, is the unique combination of information systems and benefits administration. With a combined eighteen years of Human Resources Information Systems support, TotalBen's founders know what employees expect from an effective benefits plan and how to meet those expectations.

The effectiveness of TotalBen's benefit plan administration is achieved through the implementation of the concept of a paperless plan. All the plan-related processes from enrollment to claim reimbursement are either completely automated or performed through an easy-to-use website. Plan participants are sometimes not even required to submit any paperwork. At the same time, client's benefits administrators have the ability to audit and control all of the plan's key functions and participants' data.

Commuter Account Plan's highly intuitive website represents years of analysis regarding the needs and wants of average, everyday users. Pre-populated data on every webpage has reduced user input to a minimum. Plan participants can receive monthly email reminders to submit claims. They can automatically create multiple claims for extended periods of time. Participants may choose a particular way of receiving claim reimbursements. A complete and searchable history of participant's plan activities is maintained even if the participant is terminated and is later re-hired or becomes employed by a different TotalBen client.

To summarize the above, the following are the main advantages that TotalBen's administration of the Commuter Account Plan introduces to an employer:

• No employer associated costs since, as covered by tax savings, this is a free plan
• Increased morale among current employees and company's attractiveness to job applicants; improved corporate image in the business community
• Outsourcing of benefits - removing the financial, administrative and regulatory hurdles a client may face
• TotalBen's paperless, efficient, and participant-oriented administration of all the plan's operations

For more information, contact us at:
(718) 535-7070 or info@totalben.com