No Qualified Transportation Program in Cafeteria Plan

[Chaz]

I know that Code Section 125 specifically excludes benefits provided under Code Section 132 (e.g., qualified transportation plans). Does anyone have any insight or thoughts on WHY Congress decided to not permit transportation benefits to be offered as part of a cafeteria plan?

[Guest Sieve]

Don't know for sure, but perhaps it's because the provision for qualified transportation fringes permits a mini-cafe plan (i.e., elective deferrals from compensation) on its own (IRC Section 132(f)(4)), and a more formalized written cafe plan was deemed not necessary.

[Chaz]

That's a possibility, but can't that also be said for other benefits (e.g., DCAP) that are permitted to be offered under a cafeteria plan?

[Guest Sieve]

Chaz -- The IRC Section 129 rules re: DECAP relate only to employer-paid/reimbursed $$ not be included in an employee's compensation. There is no provision there for the employee to pay for DECAP with pre-tax $$ that they otherwise would have received as compensation. That's why you need a cafe plan for DECAP.

Of course, cafe plans require non-discrimination testing, and parking specifically is not subject to non-disrimination testing--I think that was a big political football. So, putting a parking program into a cafe plan would defeat the potential disriminatory nature of parking fringes--which is why, I think, the parking fringe statutory provisions permit that mini-cafe plan.

Again, though, this is all my theory--I have not looked into any legislative history.

[QDROphile]

The answer is in the crazy history of the statute, but the explanation that involving the benefit in the cafeteria plan regime could run afoul of the cafeteria plan restrictions is valid. Transportation fringe is a more free wheeling benefit.

[Guest Sieve]

"Transportation fringe . . . free wheeling . . ." Very good, QDROphile!! Everything they say about you isn't true, after all!! (And I'm very glad that a transportation fringe is not subject to securities laws . . .!!)

[QDROphile]

Some people can't take a joke and others can't recognize a joke. Two cars meet on a one lane bridge. One driver shouts, "I never back up for idiots!" The other, shifing into reverse, replies, "I always do!" Some people keep repeating very old and corny jokes, thinking that the context justifies it.

[Guest Sieve]

Well . . . That certainly clears eveything up . . . Even MEP 401(k) plans. Crystal. Did you hear the one about the minister & the rabbi (or is that rabbit) . . .??

[QDROphile]

Silly rabbi, tricks are for kids.