It’s an exciting time in your life! You just graduated college and managed to land a job right in the heart of Boston, Massachusetts at what you consider your ‘dream’ company. On the first day of your new job, you meet with members of the HR team who begin to walk you though the benefits that you can take advantage of.
One in particular stands out to you after paying $30 to park for the day: a commuter benefit plan.
What is that, and what should you know before signing up for this benefit? Here, we’ll answer five commuter FAQs that new workers tend to have.
5 commuter FAQs new workers should know about
#1 – What is a commuter benefit plan?
A commuter benefit plan (CBP) allows employees to set aside pre-tax money to pay for expenses related to their commute to and from work. Things that qualify as “transportation fringe benefits” as defined by the IRS can be paid for through money in this fund that is contributed by you and/or your employer.
#2 – What is qualified as a transportation fringe benefit?
The IRS considers the following to be qualified transportation benefits:
- Mass transit facilities/passes – Mass transit facilities include transportation methods such as buses, trains, subways, and ferries. This commuting must be between a place of residence and a place of employment.
- Rides in commuter highway vehicles between an employee’s home and workplace – This highway vehicle must seat at least six adults (excluding the driver). It includes qualifying rides from Uber’s uberPOOL, Lyft’s Shared Ride, and vanpooling.
- Qualified parking – Parking needs to be on or near the business premises, or on or near the location from which employees commute to work (mass transit, carpools, or commuter highway vehicles).
#3 – What is the monthly contribution limit for qualified transportation or parking?
For 2020, the monthly contribution limit set by the IRS is as follows:
Note that while the amounts are the same, these are two separate allowances. It’s also important to know that money directed to one type of account can only be used for expenses related to that account.
#4 – How do you receive your commuter benefit funds?
The method in which funds are delivered to you will depend on how your employer’s commuter benefits plan is set up.
Here are some common distribution methods that your employer or a third party administrator will take:
- Provide a card (like our multi-purpose Beniversal Prepaid Mastercard®) that employees can use for parking and transit
- Purchase fare cards, passes, or vouchers then distribute them to employees
- Deposit funds on a smart card (such as Boston’s CharlieCard or San Francisco’s Clipper card)
#5 – Where should I go if I have more questions?
You can start by visiting our Commuter FAQs Page to find the answers to questions about mass transit, parking, limits, claims, and more. If you are looking for information specific to your city or state, visit our Commuter Resource Center.