Qualified Transportation Plans: An Overview for Employers

Internal Revenue Code (the Code) Sec. 132(f) allows for the tax-free provision of certain transportation fringe benefits from employers to their active employees. This benefit, known as a qualified transportation plan or commuter benefit plan, has steadily increased in popularity due in part to some state and local laws that mandate an employer offering.

Unlike benefits offered under a group health plan, transportation plans are typically much easier for an employer to sponsor and administer. These benefits are not subject to the Employee Retirement Income Security Act of 1974 (ERISA) and its related provisions, and therefore come with fewer compliance requirements. Importantly, though, the Code does impose critical guidelines that employers must follow when implementing a qualified transportation plan.

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