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What is a Commuter Plan?

Commuting expenses are a workplace reality. Now, you can pre-tax your monthly expenses with a Section 132 Plan from Peak One.

As fuel costs continue to be high, employees are looking for ways to save on their commutes to work. Commuter Accounts are a valuable employee benefit as they help employees save time and money when they use public transit for their commute to work. Plus, they help save the environment.

Commuter Accounts allow employees to set aside pre-tax funds used for eligible transit and parking expenses related to their commute to work, governed by IRC Section 132. If the participant has both a parking account and a transit account, each account is entirely separate, and funds cannot be transferred from one to the other. Transit and/or parking benefits are limited to employee expenses only; reimbursement is not allowed for spouse or dependent transit or parking expenses.

Elections and Spending

  • IRS sets maximum monthly pre-tax deduction and spending and adjusts annually; these limits reflect the maximum allowed pre-tax contribution and reimbursement amounts per calendar month.
  • 2024 limits are:
    • Transit Passes or Commuter Highway Vehicle – $315/month
    • Parking – $315/month
  • Unused amounts can be carried over.
  • Contributions are available for reimbursement based on payroll deduction cycle (like Dependent Care).
  • The employee can track account activity on the consumer web portal.

How does it work?

Our Section 132 Plan is similar to most pre-tax reimbursement accounts (such as Section 125 Cafeteria Plans) but without many of the restrictions. By enrolling in this plan, participants can use pre-tax dollars to pay for work-related transit and parking expenses. Since it operates monthly rather than annually, this program also offers you more flexibility compared to similar pre-tax reimbursement accounts. This means that you may enroll in (or make changes to) your plan throughout the year. As long as you act prior to the monthly deadline date, your participation will become effective the first day of the following month.

Benefits to Participants

The Commuter program offers the following advantages for the participant:

  • Tax Savings – The IRS allows a monthly maximum of $315 for transit and $315 for parking per month to be deducted from an employee’s pay before taxes, which can mean substantial tax savings.
  • Ease of Use – The Peak One Debit Card is convenient and easy to understand, and it provides an automatic way to pay for qualified transit expenses.
  • Flexibility – Participants are able to use a secondary form of payment when the purchase exceeds their monthly election.