Can an employee purchase a pre-tax transit pass for spouse?

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neurosphere
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Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

Summary of the post (tl;dr): I believe the answer is no. HR at my wife's employer and my employer both say yes. In fact, during orientation/onboarding HR specifically mentions that transit passes can be purchased for spouses and dependents. I have a co-worker that purchases three unlimited passes a month for her+husband+nanny (because the nanny helps them "get to work"). Who is right?

(more elaboration below)

Both our employers have an employer benefit were we can direct part of our pay, up to $260/month towards purchasing subway transit passes. Any combination of types of cards, such as single ride, monthly unlimited, etc are allowed. One is self administered, the other uses Wage Works.

I believe the relevant part of the law is here (https://www.law.cornell.edu/cfr/text/26/1.132-9):
Q-5. May qualified transportation fringes be provided to individuals who are not employees?

A-5. An employer may provide qualified transportation fringes only to individuals who are currently employees of the employer at the time the qualified transportation fringe is provided.
Those who claim spouses can get passes cannot provide supporting documentation which supports this claim. "It's just true". :annoyed

A secondary question is can a transit pass, once provided, be used for non-commuting expenses. E.g. can my wife use her subway card to visit a friend on Saturday?

There is one justification I can find in the law where buying a pass for a spouse to use might apply, if I were interpreting the law quite liberally.

1) The law provides for an employee to buy "a transit pass" up to the dollar limit. (But can more than one "pass" be purchased?)
2) The law does not specify how such pass is to be used. (So I give it to my spouse)

But I'm not sure I would want to use that argument "in court" so to speak.

Can anyone help me figure out if I'm being an idiot by not purchasing a transit pass? Or is HR giving incorrect information? This would not be new, because the main benefits representative for a 15,000 employee firm was telling folks during orientation that our in-network only EPO health insurance covered out of network services "as long as you have a referral". I had to quickly correct that! yikes. But I do not want to (again) engage HR on the transit pass issue without backup. Because I'm not 100% sure I'm right. :D
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mcraepat9
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by mcraepat9 »

neurosphere wrote: Sat Jun 30, 2018 9:06 am Summary of the post (tl;dr): I believe the answer is no. HR at my wife's employer and my employer both say yes. In fact, during orientation/onboarding HR specifically mentions that transit passes can be purchased for spouses and dependents. I have a co-worker that purchases three unlimited passes a month for her+husband+nanny (because the nanny helps them "get to work"). Who is right?

(more elaboration below)

Both our employers have an employer benefit were we can direct part of our pay, up to $260/month towards purchasing subway transit passes. Any combination of types of cards, such as single ride, monthly unlimited, etc are allowed. One is self administered, the other uses Wage Works.

I believe the relevant part of the law is here (https://www.law.cornell.edu/cfr/text/26/1.132-9):
Q-5. May qualified transportation fringes be provided to individuals who are not employees?

A-5. An employer may provide qualified transportation fringes only to individuals who are currently employees of the employer at the time the qualified transportation fringe is provided.
isn't this question really about whether an employer can provide a qualified transportation fringe to individuals it pays that are technically not employees? See, e.g. Q-24. Relatedly, the situation where an employee agrees via salary reduction agreement to buy transportation passes up to the pre-tax maximum, and then proceeds to give those passes to someone else, doesn't seem to be answered by this answer- in those situations, the employer isn't providing those other people a qualified transportation fringe. All that is happening is the employee getting the fringe is taking it and giving it to others.

Those who claim spouses can get passes cannot provide supporting documentation which supports this claim. "It's just true". :annoyed

A secondary question is can a transit pass, once provided, be used for non-commuting expenses. E.g. can my wife use her subway card to visit a friend on Saturday? Seems like the answer under federal law is yes - see Q-1 and Q-3 and related answers. However, note that often times the standard transit benefit plan terms often restrict use to commuting expenses only. But buying a "transit pass" seems to be permitted - no reference to it being limited to commuting expenses (compare to Q-2 and its answer)

There is one justification I can find in the law where buying a pass for a spouse to use might apply, if I were interpreting the law quite liberally.

1) The law provides for an employee to buy "a transit pass" up to the dollar limit. (But can more than one "pass" be purchased?) law clearly says transit passes (plural), see Q-1 and answer.
2) The law does not specify how such pass is to be used. (So I give it to my spouse) Yes.

But I'm not sure I would want to use that argument "in court" so to speak. I think this is the right way to read the section you quoted. You are trying to adhere to the spirit of the law, which conflicts with the letter of it.

Can anyone help me figure out if I'm being an idiot by not purchasing a transit pass? No you aren't an idiot - you may just be overthinking this.Or is HR giving incorrect information? This would not be new, because the main benefits representative for a 15,000 employee firm was telling folks during orientation that our in-network only EPO health insurance covered out of network services "as long as you have a referral". I had to quickly correct that! yikes. But I do not want to (again) engage HR on the transit pass issue without backup. Because I'm not 100% sure I'm right. :D
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

mcraepat9 wrote: Sat Jun 30, 2018 6:53 pmisn't this question really about whether an employer can provide a qualified transportation fringe to individuals it pays that are technically not employees? See, e.g. Q-24. Relatedly, the situation where an employee agrees via salary reduction agreement to buy transportation passes up to the pre-tax maximum, and then proceeds to give those passes to someone else, doesn't seem to be answered by this answer- in those situations, the employer isn't providing those other people a qualified transportation fringe. All that is happening is the employee getting the fringe is taking it and giving it to others.
I wonder if I can ask the question another way. My employer provides me a commuter benefit. I live across the street from my employer. I don't commute, I "walk". Is it legal for me to buy three unlimited monthly passes each month, and sell them to three strangers? If not, can I GIVE them to strangers? If not, can I give them to family? Does it matter whether I have any eligible commuter expenses personally? Does it matter whether I give them to spouse, dependents, non-dependent family?

I guess the main question is the part of your answer in bold/underline. Are there ANY restrictions on what I do with my fringe benefits? Because what's the difference whether I give an unlimited transit pass to my spouse/child/neighbor vs selling those same benefits to others? Because either there are restrictions, or there are none. And if there are restrictions, what are they?

If HR tells me that I can buy an unlimited monthly pass for myself and my spouse and my dependents, why is it limited to those parties and why is it limited to "give" vs "sell"? I cannot find where HR's instructions are supported. At my marginal tax rate, I could make an easy buck by maxing out the transit benefits across my employers and my wife employer, and putting them on craigslist. :D Moderator note: I'm not advocating doing anything illegal, I'm asking WHAT is legal. Also, I have no intention of getting any transit passes I don't need, legal or not. Just making a rhetorical point. :wink:
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

I did find this https://www.nyu.edu/hr/benefits/email/_ ... s_FAQs.pdf:
I used to buy two MetroCards a month (one for me and one for my wife) and was reimbursed by
my CERA account. Will WageWorks allow me to continue this option?

While WageWorks does not limit the number of passes or vouchers you order, you should know that
the IRS limits commutation reimbursement accounts to just employees. Spouses/Domestic Partners
and dependent children are not eligible for this benefit.
You risk an audit by the IRS if you are
purchasing commutation for a family member under the Commuter benefits plan.
And this http://hr.fhda.edu/_downloads/Guideline ... nefits.pdf:
Important: Qualified expenses include those incurred for your transportation
between your residence and worksite. Expenses for your spouse or dependents are
not eligible.
But are these restrictions placed by the employer? Or the IRS. The NYU link says the prohibition is by the IRS. Which supports my interpretation. But my employer apparently has a different interpretation. This is the question I'm trying to find definitive guidance on. :confused
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by mcraepat9 »

Those are interesting links. Don't see any citation to actual federal law on this topic, though.
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

mcraepat9 wrote: Sat Jun 30, 2018 10:24 pm Those are interesting links. Don't see any citation to actual federal law on this topic, though.
Agreed! That's what I'm struggling with! :)
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by patrick »

Not an ironclad answer, but note that both the parking and commuter highway vehicle benefits have explicit restrictions on where they can be used, while similar restrictions are noticeably absent for the transit benefit.
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by 47Percent »

This is akin to the question:

Is it okay for me to "borrow" a highlighter from the office supply cabinet from my work for my son's school project?

Answers you get will not be definitive.
What is said may be different from what the reality actually is.
The answer may depend on whether you plan to run for a high profile public office in the future.
you need to figure out what your own reality is.
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neurosphere
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

47Percent wrote: Sun Jul 01, 2018 1:11 am This is akin to the question:

Is it okay for me to "borrow" a highlighter from the office supply cabinet from my work for my son's school project?
Except in this case HR is saying "go ahead", telling people their spouses and dependents can use transit passes.

They are telling this in onboarding sessions to employees. Other examples of incorrect information (combined between my employer and my wife's employer)
-- You can use your HSA money to buy a big screen TV. They'll never know. (um, no)
-- You can go out of network in our EPO health insurance plan as long as you have a referral, so choose the EPO it's basically the same as the PPO/POS plan. (yes, of course you can go out of network, but it won't be paid for and you'll pay the cash rate).

The point remains is that I've searched extensively, and I still can't figure out if it's legal for me to buy an unlimited NYC Metro card on my wife's commuter benefit account. I used to, but then I stopped after realizing it's probably not allowed.

NS

P.S. Another wrinkle about why I'm so curious about a definitive answer. My wife's company has one of the best overall benefits package I've ever seen for a small to mid-sized company. It's stunning really. But the salaries are probably average in the industry, and they lose a lot of prospective employees to firms with higher pay. HR gives HORRIBLE information about the benefits package. That is, limited detail, very poorly presented. My wife is basically in charge of choosing/selecting/interviewing/hiring new employees in her division. She has been forced on occasion to give her own HR 'talk' at interviews to make sure folks know what they are getting. So she often fields questions about benefits from both prospective and new employees after HR says "consult your tax advisor". Because of course every 20-something has a tax advisor.
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

patrick wrote: Sun Jul 01, 2018 12:59 am Not an ironclad answer, but note that both the parking and commuter highway vehicle benefits have explicit restrictions on where they can be used, while similar restrictions are noticeably absent for the transit benefit.
True. I did notice that. Letter vs spirit of the law.
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by neurosphere »

At least one government entity (DC) specifically puts the same restrictions on transit benefits put on other commuter benefits:

"Expenses must be incurred when commuting between work and an employee's residence."
(https://dcps.dc.gov/sites/default/files ... 0Guide.pdf ; page 16 of 34).

Also, I was able to find 3 or 4 national commuter benefits providers (wage works, optum, and a couple of others) who also specifically state that benefits cannot be used by spouses and dependents.

Wageworks says "Only parking and mass transit costs incurred by you in connection with travel between your residence and your work place are eligible." (https://www.wageworks.com/commuter-tran ... -cam-faqs/)

National Benefits Services says this is prohibited: "Parking and transportation expenses for your spouse or dependents"
(https://www.nbsbenefits.com/wp-content/ ... ochure.pdf)

Is this a matter of interpretation? Local laws being more restrictive than federal? Employers who are able to be more restrictive than the full law (as with 401k plans, for example)?
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Re: Can an employee purchase a pre-tax transit pass for spouse?

Post by archbish99 »

I suspect, rather, that it's a matter of "they'll never know." My transit account issues a prepaid debit card that will only accept charges from transit providers. I use it to load my transit card (which is more financially efficient than buying a pass).

For myself, once the money or pass is on my card, there's no way to separate the money used for commuting versus the money used for otherwise getting around town. I personally don't bother - most of my transit is commuting, and I'm not going to, say, carry two transit cards to keep commuting and non-commuting trips segregated.

My provider wouldn't be able to tell if some of my transactions were to top up my wife's card. But I don't even have a plausible claim that it's difficult to segregate our transactions, so I don't do that.
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