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Transit and Parking Reimbursement Plans

Transit and Parking Reimbursement Plans

Benefit Strategies' Commuter Choice Benefit Plan designed under the Internal Revenue Code Section 132(f) allows employers to offer their employees the choice to direct a portion of their salary into reimbursement accounts to pay for certain work-related parking and/or mass transit expenses on a pre-tax, salary reduction basis.

How Does The Commuter Choice Benefit Plan Work?

Before the plan year starts, employees evaluate their annual needs and make an election to set aside a portion of their salary, pre-tax, into a parking or mass transit expense reimbursement account.

Under current federal law (2006), the following amounts may be contributed to the Commuter Choice reimbursement accounts:

• Parking Expense Account = $205 / month (Federal)
• Mass Transit Expense Account = $105 / month (Federal)

Effective January 1, 2007 the rates will be as follows:

• Parking Expense Account = $215 / month (Federal)
• Mass Transit Expense Account = $110 / month (Federal)

These funds cannot be co-mingled or transferred between accounts.

During the month, as Qualified Transportation Expenses are incurred, employees may receive reimbursement by using their FlexExpress© Card or by submitting a Request for Reimbursement form plus documentation of the Qualified Expense to the account administrator.

Monthly expenses cannot exceed the monthly Federal limits.

At the end of the plan year, any unclaimed funds are rolled over and applied toward expenses incurred during the next plan year.

Tax Savings

All funds placed into a Commuter Choice Plan are free of federal (15%+) and FICA (7.65%) taxes. In some states, it is also exempt from state income tax. Every dollar set aside for commuter expenses would save an employee a minimum of 22.65% and possibly much more depending on their federal tax bracket and state income tax, if applicable.

Qualified Transportation Expenses

Qualified parking expenses include:

• Parking a vehicle in a facility that is near the employee's workplace
• Parking at a location from where the employee commutes to work (e.g., train station, or by carpool)

Qualified mass transit expenses include:

• The cost of any pass, tokens, fare card, voucher, or other item that entitles the employee to use mass transit for the purpose of traveling to or from their place of work.

Transit passes may be via a mass transportation system such as:

• Bus
• Vouchers
• Train
• Tokens
• Subway
• Fare Card
• Ferry

Forms and Resources

Please visit our Forms and Resources page for information, downloads, and answers to your important questions regarding our Transit and Parking Reimbursement Plans.

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