Employees may elect to have their parking permit payroll deductions made on a pre-tax basis. In order to make an informed choice, the information below may be helpful:
The parking deduction will not reduce your ORP / TRS retirement gross.
The POSITIVE consequences of electing pre-tax parking is that it will REDUCE your:
- Federal Income Tax Withholding Deduction
- Social Security Tax (OASI) Withholding Deduction
- Taxable Income
The NEGATIVE consequences to electing pre-tax parking is that it will REDUCE your:
- Social Security Contributions and Employer Matching Contributions
For example, assume the following facts:
- Social Security tax deductions and employer matching = 7.65% each
- Withholding Tax rate = 28%
- Monthly parking = $12.00
Ellecting the Pre-tax parking deduction would result in an INCREASE in net pay per month of $12 X (.0765 + 0.28) = $4.28
That is, electing the pre-tax parking deduction will reduce the deductions from your gross pay by $4.28
However, electing the pre-tax parking deduction will result in a DECREASE in OASI matching retirement benefits per month by $12 X (.0765) = $0.92
That is, you will forfeit the OASI matching contributions paid for by the University on your behalf.
This election is deemed to be made on a monthly basis. It cannot be retroactively elected, nor can it be retroactively cancelled. No refunds for past pre-tax parking may be made. Please check your earnings statement carefully each month.
If you wish to cancel your pre-tax election, it must be done by the 15th of the month preceding the month in which the election would have been made. For example, if you decide that you do not want your parking deduction to reduce your taxes and retirement contribution for the month of May, you must notify Parking & Transportation Services at 747-5724 prior to April 15.