On December 19, President Barack Obama signed into law H.R. 5771, the Tax Increase Prevention Act of 2014. This legislation made significant impact upon a number of pre-tax benefits including commuter benefit plans. The legislation, passed by Congress earlier in December, will extend retroactively for one year (through the end of 2014) a number of tax relief provisions that expired either at the end of calendar year 2013 or during 2014, thus preventing tax increases when the tax year 2014 filing season begins early in 2015. As a result of this new legislation transit and parking pre-tax limits will be set to the $250/month limit. This is an increase for transit benefits from the current $130/month limit while pre-tax parking benefits remain the same at $250/month.
How does this affect our benefits?
If you currently offer post-tax transit benefit plans you will need to adjust any 2014 post-tax deductions to be pre-tax up to $250/month. Current IRS guidance indicates that pre-tax transit limits will remain at the $130/month level in 2015. You do not need to contact HRCTS for any additional adjustments to your benefit plans. This change will only affect your employees W2 statements.