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What is a Transportation Flexible Spending Account?

Established under Section 132 of the IRS Code, a Transportation Flexible Spending Account is an employee benefit plan that allows you to set aside a portion of your gross salary to pay for work-related parking and mass transit expenses on a pre-tax basis. These accounts are for specified transportation and parking expenses for commuters.

A Transportation Flexible Spending Account works much the same as a Health Flexible Spending Account. Employee’s elect the amount to contribute into their Transportation FSA through pre-tax payroll deductions. Then, employees can access the funds to pay for qualified transportation expenses using a manual claim reimbursement process or the PowerFlex Benefits Debit Card.

There are two types of Transportation Flexible Spending Plans under Section 132:

  • Vanpooling Accounts
  • Parking Accounts

These accounts must be maintained as separate accounts and funds cannot be combined or transferred between them.

Eligible Expenses for a Transit and Vanpooling Account:

  • Mass Transportation (e.g. subway or bus) passes, tokens, fare cards, vouchers (or similar items.
  • Transportation via a commuter highway vehicle (Van-pool) to and from the participants residence and the place of employment.  (Important Note: The commuter highway vehicle must seat at least six passengers plus the driver)

Eligible Expenses for a Parking Account:

  • Expenses for parking at or near place of employment.
  • Expenses for parking at or near a point of mass transit, commuter highway vehicle, or carpool.

Ineligible Expenses:

  • Tunnel, bridge, or highway tolls (EZ Pass)
  • Non-work related transportation or parking expenses
  • Fuel, mileage or other costs incurred to operate a personal vehicle or taxi
  • Expenses incurred in traveling from your office to business or client meetings
  • Transit or parking expenses of your spouse and dependents

Contribution Limits:

The maximum amount you may contribute for 2011 is:

  • Transit and Vanpooling - $230.00 per month (combined total)
  • Parking - $230.00 per month

Election Changes and Unused Funds

Unlike a Medical Flexible Spending Accounts, your Parking and Transit contribution amounts can be modified from month to month as your needs change. You can only spend the amount of the monthly IRS limits ($230 for transit and $230 for parking) in any given month; however, your unused contributions carry forward indefinitely. You can use these carry over funds for future eligible transportation and parking expenses as long as you remain with your current employer. Upon termination, any remaining balances in your account may only be used to reimburse expenses incurred prior to your termination.