In 1998, the IRS passed regulations under IRC 132 that allows employers to sponsor a pre-tax benefit for commuter benefits. Under this program, employees can set aside funds through payroll deduction to pay for work-related transportation and/or parking expenses. This program works similarly to an FSA Plan. Employees' taxable income is reduced by the amount they choose to deduct for “qualified transportation expenses.”
Types of Allowable Expenses
If employees commute to work via mass transit (i.e. public transportation including bus, train or rail systems) or by vanpool, employees can use pre-tax dollars to pay for those mass transit costs related to their commute, up to the current IRS limit.
Employees who commute to work by car and pay to park, or commute via mass transit and pay to park at or near the mass transit site, can use pre-tax dollars to pay for parking costs related to their commute to work, up to the current IRS limit.
Standard Plan Implementation Services:
Plan design assistance and documentation
System setup scheduled to meet client's needs
Electronic (soft) copies of forms
Standard Administration Services:
Receive and process new elections, changes and terminations
Why would I want to participate in this program? To save taxes – the funds you allocate to this plan are exempt of federal income tax, social security and Medicare taxes, and in most states these amounts are also exempt from state income tax. The funds you elect to contribute are set aside from your paycheck on a pre-tax basis and deposited in an account in your name for this benefit. As you incur eligible expenses you are reimbursed from the plan, either by cash reimbursement or transit vouchers and passes where available.
How much can I set aside? The plan limits vary from year to year current limits are as follows:
You may set aside up to $255.00 per month for qualified mass transit
and vanpooling expenses combined (2016) - See link at bottom of this page.
You may set aside up to $255.00 per month for parking expenses (2016).
What does a qualified expense include?
For mass transit – tickets, passes, fare cards and fares you pay for your work commute on a bus, train, subway, ferry or qualified vanpool. Expenses NOT covered include bridge tolls, toll road fees or mileage.
For parking – expenses incurred to park near or at your place of work or at a mass transit facility. Expenses NOT covered include reimbursement to park at home if you work at home.
How do I enroll?
Complete the appropriate enrollment form indicating the amount you want deducted from your paycheck for transit and/or parking expenses. This amount will be deducted from each pay period on a pre-tax basis and deposited in your benefit account.
Return the completed form to your HR Benefit Coordinator.
Your enrollment will continue each month until you advise your HR department, in writing, that you want to terminate this benefit.
Enrollment forms can be e-mailed or faxed to you from your HR department. You may contact your HR department for assistance if you have any questions regarding this benefit program.
When can I enroll or make changes? Check with your Benefit Coordinator for enrollment eligibility as a new hire or for a new enrollment during the year. You will also be able to make changes during the year without restriction. The timing of those changes will be at the discretion of your payroll department. Your benefit coordinator or HR department can give you a time frame when you need to make a change or if you choose to terminate your participation. Termination and changes are required to be in writing.