Transportation Fringe Accounts (“TFA” Plan)
In 1998, the Transportation Equity Act for the 21st Century (TEA21) established two pre-tax accounts for allowed transportation under IRC Section 132(f). Two separate accounts allow pre-tax payroll deductions (similar to the Flex Plan) for employees commuting between their homes and workplace for:
- Mass Transit: Qualified mass transit transportation up to $230.00 per month for mass transit facilities between your residence and place of business. It includes purchase of tickets or transit passes (meaning any pass, token, farecard, voucher or similar item entitling a person to transportation). For example: MetroCards, PATH QuickCards, Commuter Rail Services (MTA, AMTRAK,LIRR, NJ Transit, Metro North), Ferry Services, Commuter Bus Services, and Vanpool Services.
and/or
- Parking Expenses: Qualified parking expenses up to $230.00 per month would be allowed for parking near the business premises of the employer or on or near a location from which the employee commutes to work by mass transit (see above), in a commuter highway vehicle or by carpool. Such expenses would not include any parking used for residential purposes.
The TFA Plan setup and enrollment is simple as there is no requirement for a Plan Document or Form 5500 reporting. The enrollment process can be completed in as little as two weeks. Similar to the Flex Plan pre-tax dollars lower the Federal, State, Local, FICA and Medicare taxes. These pre-tax payroll deductions can be used to either purchase TransitCheks or to establish the above a TFA Plan accounts whereby employees can submit claims for reimbursement.
Unlike the Flex Plan accounts, there can be open enrollment and changes are allowed without restriction. The reimbursement for these accounts is limited to amounts credited to a participant’s account. Account balances are carried over from period to period and year to year (so the “use it or lose it” rule does not apply).
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