2016 Changes to Pre-Tax Transit Plans: Q&A

  • New transit rules going into effect in some regions on January 1, 2016, may impact your pre-tax Commuter Plan.
    New transit rules going into effect in some regions on January 1, 2016, may impact your pre-tax Commuter Plan.

    Q: What are the changes to the rules for mass transit plans?

  • A: The IRS issued 2014-32, click here. The most significant change to commuter plans is that employers may no longer provide cash reimbursements for mass transit expenses when a terminal-restricted debit card is readily available in the employer’s geographic area, beginning 1/1/2016. Parking expenses may still be submitted for cash reimbursement.
  • Q: How much can I contribute to a parking or transit account each month?
  • A: The monthly pre-tax limit for parking for 2016 is $255 and the monthly pre-tax limit for transit for 2016 is $130.00.
  • Q: What happens to the funds in my commuter transit account if I leave my employer?
  • A: Unused amounts are forfeited and cannot be refunded.
  • Q: I had to pay for my transit fare using a personal credit card; can I submit claims for reimbursement?
  • A: No, cash reimbursement will not be allowed after 1/1/2016.
  • Q: Why has my card been denied at certain vendors?
  • A: Your transaction may experience a denial for a – number of reasons, for example, you are trying to purchase a fare greater than the amount you have in your account. Another possible reason is the transit authority or vendor from whom you are purchasing transit fare is not terminal-restricted.
  • Q: I have a parking account; can I submit receipts for cash reimbursement?
  • A: Yes, you may submit receipts for parking expenses and receive cash reimbursement for your expense. The new transit rule did not affect parking accounts.
  • Q: I use a commuter vanpool service that does not offer fare cards to pay for its services. Can I still pay for the services on a pre-tax basis?
  • A: Yes. Because fare cards are not available, the law allows your employer to reimburse you for the cost of your vanpool service after receiving your completed claim form and proof of the expense.
  • Q: Can you provide a list of participating transit vendors?
  • A: Yes, for a sample listing of vendors, please see this link.

Featured Blog Post