A transportation benefits plan allows employees to pay for qualified transportation expenses on a tax-advantaged basis.  Transportation expenses must be incurred or paid for the purpose of transportation between an employee’s residence and regular place of employment.  Most transportation benefits can be paid tax-free by the employer and/or through pre-tax employee contributions.

Qualified transportation expenses, as defined by the IRS, include transit passes, commuter highway vehicles, and parking.  Certain bicycle commuting expenses can be reimbursed by an employer but not by employee pre-tax contributions. Reimbursement exceeding the IRS monthly benefit limits will be taxable to the employee.

Although qualified transportation plans are not subject to ERISA and are not required to be in writing, employers may want to prepare summaries of the plan benefits with monthly election limits and procedures for employee elections and reimbursements.   

Keller assists our clients with employee communications for transportation benefits. For more detailed information regarding transportation benefits, please contact your Keller consultant or visit the Client Portal.