Planes, Trains & Automobiles

After a series of temporary extensions, transit and parking benefits finally have a permanent fix

In a flurry of year-end activity, Congress adopted a massive tax and spending package that contains a litany of employee benefit provisions…including one which will help employers lower travel costs for their employees who commute to work. Signed into law by the President on December 18th, the Consolidated Appropriations Act of 2016 (Public Law 114-113) provides a permanent extension of eligible transit and parking benefits, retroactive to the beginning of 2015.

The Act increases the maximum monthly exclusion amount for transit benefits provided under a qualified transportation plan, making it equal to the limit for qualified parking benefits.* As a result of this equivalence – often referred to as “transit parity” – the transit limit for 2015 will jump to $250; and to $255 for 2016, pursuant to cost-of-living adjustments.**

In order to accommodate this legislative change, TASC will be implementing the following plan:

2015                                                                                                                           There will not be a change to MyTASC pertaining to the 2015 limit. The Participant would have needed to already elect an amount in excess of $130/month in order for any retroactive amounts to apply.

However, if a Participant did elect an amount greater than $130, then the excess transit benefits already taken can be re-characterized as pretax deductions up to the new amount of $250 (for 2015). Note: This is the employer’s responsibility.

2016                                                                                                                            TASC is currently working on updating the 2016 limits from $130/month to $255/month. Once completed, we will also automatically update the Client’s elected maximum; this amount will be increased by $125 for each month of the plan in 2016 (see examples below). Note: If a Client does not want their elected maximum to change, they will need to log into their account and update Plan Management or contact TASC to update the Plan.

  • Example 1 – Plan Start Date 10-01-2015 / End Date 09-30-2016

The system will increase the elected transit amount by $125.00 for each Plan month in 2016 (9 months X $125.00 = $1,125.00).  If the Plan’s original elected transit amount is $1,560.00, the system will update the elected transit amount to $2,685.00.

  • Example 2 – Plan Start Date 01-01-2016 / End Date 12-31-2016

The system will increase the elected transit amount by $125.00 for each plan month in 2016 (12 months X $125.00 = $1,500.00). If the plan’s original elected transit amount is $1,560.00, the system will update the elected transit amount to $3,060.00.

Once the Plan is updated, the Client may increase Participant elections, as applicable. Participants that would like to increase their transit election amount for 1/1/16 will need to request a change through their employer. Change requests must be completed and updated in MyTASC by 1/31/16 to be effective as of 1/1/16.

This is good news for employees typically in urban and suburban areas around the country who wish to utilize public transit. In fact, many cities now require employers to offer both transit and parking benefits to their employees on a pre-tax basis.

Happy New Year!

 

*Effective January 1st, parking will increase from $250/month to $255/month; TASC has already added the new limit to MyTASC and automatically increased the Client’s elected maximum amount.

**These amounts reflect increases of $120 and $125 respectively. Until enactment, the exclusion for transit benefits has been limited to $130 monthly.

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