Qualified Transportation Fringe Benefit Program Questions

[rocknrolls2]

My Company is preparing to implement a salary reduction qualified transportation fringe benefit program effective 1/1/2001. In designing the program, the following issues arise:

1)If an employee ceases to make salary reduction amounts but remains employed, may s/he seek reimbursement for qualified transportation provided in the future until his/her account is used up?

2) If an employee prepays a parking expense before the program is implemented, may s/he seek reimbursement for each month as the parking is provided?

3) Can contributions be generic and applied to parking and/or transit passes or are there two separate categories?

4) If an employee is paid biweekly, then s/he will be paid three times during two months of every year. Q&A-13 of the Proposed Regulations limits salary reduction to the combined limit of $240. During months when the employee has three payroll dates, it is possible that her/his salary reduction amount will exceed the combined limit. Any suggestions for dealing with this situation?

[Guest jreddi]

Good questions. Now, some answers:

1. No, the only expenses that are reimbursable are those that were incurred during particpation in the plan. If the employee incurred expenses prior to terminating his/her participation, then those expenses are covered.

2. As above, only expense incurred after the program's implementation may be claimed for reimbursement. However, if, going forward, the employee has a monthly parking expense, s/he may claim that each month.

3. Contributions may be generic. All that is necessary are the proper receipts. So, if an employee takes public transportation two days a week, but takes a vanpool the other three, both expenses can be claimed.

4. What happens here is that twice a year, we have a deduction holiday in which no deductions for anything are taken. You will need to work with your payroll department to work out the detail.

Hope this helps...

[Guest jgroves]

As far as question #4 goes, the way around this is to deduct the full amount the first Pay Period of each month rather than split it up between 2 or 3 pay periods each month. It works out the same cash wise for the employee and is a little easier because you don't have to calculate the pay period cost for a receipt that covers a full month.