Section 132(f) Tax-Free Transportation Plan

The Plan

Until the new IRS regulations went into effect January 1st, 2002, the existing rules were so loose that many employers did not have 132 plans administered through TPA's, With the new regulations, it is a new game entirely:

• IRS places the monthly limit on both contributions and reimbursements
• The elections are irrevocable for the coverage period

IRS Limits

Under a 132(f) TFT Plan, the IRS has placed limits on Parking Expenses, Transit Passes and Vanpooling Expenses. In 2005, the limit for Parking Expenses is $200 per month and $105 per month for Transit Passes and Vanpooling Expenses. These limits are applied to monthly contributions and reimbursements.

Irrevocable Elections for Coverage Period

Given the IRS regulations of irrevocable elections, our 132 Plan allows for flexible coverage periods ranging from 1 pay period to 12 full months. Employee elections can be "evergreened" so that the contributions from one coverage period are carried forward to the next. This process significantly reduces the time involved with re-enrollments.

Administration Methods

A 132(f) TFT Plan can use two methods to administer transportation fringe benefits - Conversion and Direct Reimbursement. With conversion, the employer provides the benefit to the employees and reduces the employee's compensation by the amount of the benefit cost. Under reimbursement, the employee pays for the expenses, submits a claim and is reimbursed for qualified expenses. A single plan can consist of Reimbursement and Conversion methods.

Benefits Available Under a 132 Plan

A 132(f) TFT Plan can offer one or more of the following benefits:

• Qualified Parking Expenses Conversion Benefit
• Qualified Parking Expenses Reimbursement Benefit
• Transit Pass and Vanpooling Expenses Conversion Benefit
• Transit Pass and Vanpooling Expenses Reimbursement Benefit