Section 132 of the IRS code is a qualified Transportation Plan to reduce the cost of commuting to and returning from work. This benefit can only be provided through an employer.
The IRS provides two methods to assist with commuting costs:
- Commuter highway vehicle or transit pass
- Qualified Parking
For the year ending 2023, $300 is permitted per month for commuter costs.
For Qualified Parking, $300 is permitted per month.
These are allowances the employee can set aside on a tax-free basis provided they meet the qualification of these two plans. Per IRS guidelines, you can only be reimbursed up to the available balance in your account and be subject to the monthly limits.
Although a 132(f) plan is similar to a Flexible Spending Account, it does not have a “use it or lose it” penalty. Any unused funds will be carried forward into the next plan year if you are an active employee.
Before the start of the 132(f) plan year, employees will elect to set aside a certain amount of pre-tax salary to cover qualified transportation expenses. The employee can designate up to $300 per month for qualified commuter costs or $300 for qualified parking if their employer permits these levels.
- The employee sends in receipts from qualified transit. RHS will reimburse employee within ten days of receipt.
- Benefits Card: This card can be used whenever possible and will provide funds necessary to purchase transit passes, etc. if available. The employee needs to maintain receipts for personal IRS auditing purposes.
You can access your card balances by either calling Redwood Health Services at 800-548-7677 or by accessing your account online (instructions will accompany the card).
Certain Expenses are not eligible:
- Carpool expenses
- Expenses reimbursed by your employer
- Bridge and road tolls
- Non-work expenses
- Your spouse and dependents are not eligible