Transportation Benefits

What are transportation benefits and how do they work?

Employees are allowed to set aside pre-tax compensation in two categories - transit and parking. In the transit category, qualified commuter expenses generally include expenses for the use of mass transportation - train, subway, bus, transportation in a commuter highway vehicle, transit passes, and qualified bicycle reimbursement.

Before the start of the plan year, employees elect to set aside a certain amount of pre-tax salary to cover qualified costs incurred in commuting to work. The employee designates an amount for mass transit expenses and a separate amount for parking expenses. Separate reimbursement accounts are maintained for each category and funds cannot be commingled or transferred between accounts.

Are transportation benefits subject to the "use it or lose it" rule?

No. If an employee does not use the full amount in the account before the end of the plan year, the left over amount is carried forward to the next plan year.

How much can be contributed?

Transit and parking maximum contributions are set by the IRS and are generally adjusted annually for inflation. The current limits are $125 monthly for transit and $240 monthly for parking. The bicycle commuting limit is $20 monthly.