Transportation Plans

[Guest Pam Frazzitta]

In a transportation plan, is it considered pay as you go like dependent care reimbursment or can it be advanced like medical reimbursement? Also, must a check be cut directly to the participant or can the participant have the employer may be the bill?

[Guest AHayhow]

Did anyone reply directly to you on this question because I am wondering the same thing? Thanks

[Joe Priselac]

A IRC Section 132 plan can allow either parking or transit pass benefits on a pre-tax basis. Parking can be operated on both a reimbursement basis or a direct employer paid basis. The limit is a monthly limit of $185 effective 2002. Your question about wether you handle this account like a dependent care account, pay as you go, or like a health FSA, fully funded isn't really that important for a 132 plan since we are dealing with a monthly limitation. As a practical matter most employees pay their parking expenses on a monthly basis. Transit passes on the other hand can only be operated on a reimbursement basis if they are not "readily available" to the employer from the transit authority. This has forced many employers into the cumbersome practice of having to internally distribute the transit passes to their employees. The monthly limit for transit passes is $100 begining January, 2002. The readily available rule states that an employer can only use a reimbursement system if the charge for the transit passes is more than 1% of their value. Some transit authorities accept debit cards which eliminates the internal distribution hassle.