Qualified Transportation Plans
Section 132 of the Internal Revenue Code permits employers to offer transportation fringe benefits on a pre-tax basis for employees. Employees may receive employer-funded reimbursements or may contribute on a pre-tax basis for expenses related to qualified parking, transit passes, and vanpooling. Effective January 1, 2009, employers may also reimburse employees for certain bicycling commuting expenses.
The maximum benefit amount for each type of transportation expense is a federal limit that is annually set by the IRS.
Click here to view 2009 limits »
FAQs
Is a written document required for a Qualified Transportation Plan?
No, Section 132(f) does not require a qualified transportation plan be in writing. However, it is a best practice to have some form of documentation on which the plan operates- such as basic rules and provisions as well as employee election forms.
Must transportation expenses be substantiated?
Yes, transportation expenses must be substantiated within a reasonable period of time, which is within 180 days of when the expense was paid. For situations where a receipt is not normally provided (such as metered parking), the expense may be reimbursed if the employee certifies to the employer the type and the amount of the expense incurred, and the employer has no reason to doubt the employee's certification.
If an employee terminates employment (or otherwise ceases to participate in the transportation plan), may the plan refund any balance remaining in the transportation account to the employee?
No, an employee may not receive a refund of any transportation plan contributions. Any balance remaining at the time the employee ceases participation in the plan would be forfeited.
Are there any discrimination tests that apply to transportation plans?
No, Section 132 does not apply any specific non-discrimination testing to transportation plans.
Additional Resource
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