Commuter Expense Reimbursement Account (CERA)
A Commuter Expense Reimbursement Account, allowed by § 132 of the Internal Revenue Code, allows employees to have their parking and commuter expenses deducted on a pre-tax basis. Employees can deduct up to $245 per month for parking costs or up to a maximum of $245 per month for mass transit or van pooling costs. There is a $245 limit for combining mass transit and van pooling.
How does it work?
Employees who want to participate in the Commuter Expense Reimbursement Account must make an annual election by enrolling each year. The annual election is divided by the number of payroll cycles during the plan year to determine a per-pay period amount. This amount is reduced from the employee’s income prior to taxes. When commuter expenses are incurred, employees will submit a completed claim form along with appropriate supporting documentation for reimbursement. Employees cannot be reimbursed more than the balance in their account. Claims will be processed within 3-5 business days. Participants will be issued a check or, if elected, their reimbursement will be deposited into their bank account.
This is the only plan that allows remaining funds to roll over to the next year, contingent upon re-enrollment in the new plan year. If the employee does not re-enroll at the end of the plan year, they will have a run-out period to request reimbursement only for commuter expenses incurred during the plan year. Any funds remaining in the account at the end of the run-out period will be forfeited to the employer.