QUALIFIED TRANSPORTATION PLAN

Section 132 Transportation Plans

A Qualified Transportation Plan is a benefit program to help Participants reduce the cost of commuting to and from work.

Section 132(f) of the Internal Revenue Code (IRC) permits employees to pay for commuter vehicle expense, transit passes, and qualified parking expenses on a tax-favored (pretax) basis.

Two separate “spending accounts” are available:

• Commuter Spending Account – Transportation costs associated with a commuter highway vehicle for travel between an employee’s residence and place of employment, and any transit pass can be pre-taxed.
• Parking Spending Account – Qualified Parking Expense can be pre-taxed.

How does a Commuter Spending Accounts Work?

An employee may establish a spending account to reimburse predictable expenses if they are incurred for out-of-pocket commuter and transit expenses. Once the employee has determined their annual predictable expenses for the period of time covered by the Plan Year, a portion of that amount may be paid for with pretax pay, deposited on a per pay basis to the spending account, which has been elected. The maximum pretax deferral allowed is $130 per month for the Commuter and Transit Spending Account.

To receive reimbursement, an employee must complete a claim form and submit it along with their paid bills to the designated claims administration representative. Once the claims administrator receives the claims, all claims will be processed for reimbursement.

Employees can change their election amount at any time during the Plan year.  Unused balances at the end of the year can be carried over to the next Plan year. Any unused balance upon termination of employment could be forfeited.

Expenses, which may be included, are “Transit Passes”, which is defined as any pass, token, fare card, voucher or any other item that entitles you to use mass transit for the purpose of traveling to and from work. “Commuter Highway Vehicle” expenses may also be included but limited to highway vehicles with seating capacity for at least six adults (not including the driver) and at least 80 percent of the vehicle mileage must be for purposes of transporting employees in connection with travel between their residences and place of employment. And, expenses for trips during which the number of employees transported for such purposes is at least half of the adult seating capacity for such vehicle (not including the driver).

How Parking Spending Accounts Work

An employee may establish a spending account to reimburse predictable expenses incurred for qualified parking expenses. Once the employee has determined their annual predictable expenses for the period of time covered by the Plan Year, a portion of that amount may be paid for with pretax pay, deposited on a per pay basis to the spending account, which was elected. The maximum pretax deferral allowed is $255 per month for the Parking Spending Account.

To receive reimbursement, an employee must complete a claim form and submit it along with their paid bills to the designated claims administration representative. All claims will be processed for reimbursement.

Employees can change their election amount at any time during the Plan year. In addition, unused balances at the end of the year can be carried over to the next Plan year. Any unused balance upon termination of employment could be forfeited.

Expenses that may be included are Parking Expenses which means parking lots to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by mass transit, commuter highway vehicle, or by carpool. Such terms shall not include any parking on or near property used by the employee for residential purposes.

Contact us and we can set this up for your company.                                                                 Rich Miller