Commuter or Transit Benefits (Section 132)
Parking & mass transit expenses may be paid for with pre-tax dollars through a commuter plan. This plan is a straightforward way for participants to reduce their commuting costs and for employers to gain additional payroll tax reductions.
Some states, like NY and NJ have mandated the inclusion of commuter benefit plans over the last few years. A commuter benefit plan is typically offered as one component of a Flexible Spending Account (Section 125)
What expenses qualify as commuter/transit benefits?
Commuter highway vehicle: A commuter vehicle is any highway vehicle that seats at least 6 adults (not including the driver). In addition, you must reasonably expect that at least 80% of the vehicle mileage will be for transporting employees between their homes and workplace with employees occupying at least one-half the vehicle’s seats (not including the driver’s).
Transit pass: A transit pass is any pass, token, fare-card, voucher, or similar item entitling a person to ride, free of charge or at a reduced rate, one of the following 1) On mass transit, or
2) In a vehicle that seats at least 6 adults (not including the driver) if a person in the business of transporting persons for pay or hire operates it.
Mass transit may be publicly or privately operated and includes bus, rail, or ferry.
Qualified parking: Qualified parking is parking you provide to your employees on or near your business. It includes parking on or near the location from which your employees commute to work using mass transit, commuter highway vehicles, or carpools. It does not include parking at the employee’s home.
Also, commuter benefit plans allow participants to make contribution changes on a monthly basis. Employers have the choice of allowing members to make monthly changes when necessary or choosing to have participants contributions fixed for an entire plan year.
Please contact your Total Benefit Solutions, Inc group account manager at (215)355-2121 or additional details about pre-taxing your parking or transit expenses.