Pre-tax transportation (S132(f)

Caroliso

We are about to institute this benefit where employees can set aside pre-tax dollars for qualified transportation and parking expenses.

Two questions we couldn't find answers to:

1) when does the unused balance get paid back to employees (same plan year or after plan year is over and is there a time frame) and does it get taxed?

2) Are plan documents or summary plan descriptions required for this benefit?

Okay, that's more like four questions but I'm hoping you'll overlook that flaw.

Thanks in advance.

Pearce

Before you set up a plan you should read the regulations and any IRS comments regarding. I researched this a few years ago (not currently administering a 132 plan) and there may have been some changes; however, I believe that carry over is allowed but pay back to employees is not. A summary (formal SPD) is not required but how will you explain the benefit to an employee if you do not have some written material regarding how to begin, change or end participation in the plan.

System

Do you have a TPA? If so, they should be able to provide the Summary Plan Description and answer your questions.

Gotta' admit. This is a benefit that's new to me. What is a "qualified transportation and parking expense?"


Please don't make me go look it up!

Thanx.

Caroliso

Okay, okay, I'll take pity on you. ;-)

It's a pre-tax benefit that operates like a cafeteria plan. employees can set aside money for the year on a pre-tax basis, and submit receipts for transportation (passes, tokesn, fare cards, vouchers, etc.) costs or parking costs in a facility near work or home. There's an annual max for each.