No Go on Transfer of Transportation Benefits

No Go on Transfer of Transportation Benefits

Work location changes deriving from the pandemic notwithstanding, a recent IRS information letter reminds us that account balances from one plan cannot be transferred to another plan.

The IRS was asked whether a qualified transportation program (QTP) account balance could be transferred to a health flexible spending account (FSA). The answer, not at all surprisingly, is no. Qualified transportation benefits are not an eligible benefit under a Section 125 cafeteria plan.

The good news for qualified transportation program participants is that elections can be changed frequently. Unlike with cafeteria plans, a QTP contribution amount election is not locked in for 12 months.

If an employee does not use the full amount of their salary reduction for qualified transportation benefits, the employer can allow any unused amounts to roll over. There is no “cash out” option available for QTPs. Salary reduction amounts designated to a QTP may only be used to reimburse QTP expenses, and cannot be used to reimburse expenses for any other fringe benefit.

It is important for employers to communicate to employees participating in a qualified transportation program that the employee should monitor their needs and adjust their salary reduction contributions as their needs change.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

No Go on Transfer of Transportation Benefits Transportation.jpg?ver=o4ntswQ6V7GMqkC06LEjzQ%3d%3dUnused QTP amounts cannot be rolled over, into a cafeteria plan.2022-05-03T19:00:00-05:00Unused QTP amounts cannot be rolled over, into a cafeteriaplan.Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceNo