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Transit /Parking IRS Monthly Limits


Linda Adams
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I have a question regarding the IRS 2017 Transit/Parking limit of $255/ month. We have some clients who have set up pretax transit/parking and also after tax parking/transit employee deductions. From an IRS limit perspective under the cafeteria plans, do I also include EE after tax transit/parking payroll deductions combined with the EE pretax transit/parking deduction limit of $255/ month?

Or is the limit of $255 just for pretax transit/parking ee payroll deductions and the employee can contribute more than $255/ month for aftertax transit/parking to their account?

I work for a payroll software company and we want to put a WARNING message on the employee's payroll when they exceed the $255/month limit...but I am not sure if the limit includes after tax transit/parking EE contributions so that is why I am asking.

Thank you,

Linda Adams

 

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The transit benefit is NOT under a Cafeteria Plan. Cafeteria Plans fall under Section 125 of the Code and Transit Plans are under Section 132 of the Code. The 2-17 limits are $255 for parking and $255 for transit. A participant can have both. If the employer permits additional post tax deductions, those would be treated as any post tax deduction permitted by that employer. The new limits for 2018 will be $260 for each parking and transit.

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Thank you for your response. That helps. I will just only allow the pretax limit for transit and parking each to be $255 for 2017 and $260 for 2018. Any additional post tax transit or parking ee payroll deductions will not have an IRS limit. That is my understanding of your guidance. If I am misunderstanding...please let me know.

Thanks again. Much appreciated.

-LInda

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