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Tax Reform Update

Flores quick summary:

  1. There is no change to the tax treatment of any employee contributions to a QTE.
  2. With the change in tax treatment of employer contributions to a QTE as of 1/1/2018, you may want to consider your overall benefit strategy moving forward.
  3. If you elected to allow for the reimbursement of Bicycle Expenses under your QTE plan, as of 1/1/2018, they will no longer be eligible.

December 22, 2017 - On December 22, President Trump signed into law H.R. 1 (Pub. L. No. 115-97). Two changes related to Qualified Transportation Expense (QTE) plans were enacted:

  • Contributions for QTE: The Act disallows employers from deducting the expense of any qualified transportation fringe paid for directly by the employer. However, the exclusion from income for such benefits received by the employee is retained. Employees can continue to contribute pre-tax earnings to qualified plans. Act Section 13304, which modifies IRC Section 274, is effective for tax years beginning after December 31, 2017.
  • Qualified Bicycle Commuting Reimbursement: The Act suspends the exclusion from gross income and wages for qualified bicycle commuting reimbursements. Act Section 11047, which modifies IRC Section 132(f)(8), is effective for tax years beginning after December 31, 2017 and before January 1, 2026.

As a reminder, the monthly limit on the value of qualified transportation benefits exclusion for qualified parking provided by an employer to its employees for 2018 rises to $260, from the $255 limit in 2017. The monthly limit for transportation in a commuter highway vehicle and transit pass provided by an employer to its employees is also increased to $260 for 2018 from $255 in 2017. This was unchanged by Tax Reform.

Please contact your Flores dedicated Account Manager at 1-800-532-3327 with questions related to your QTE account.

About Flores & Associates

Flores is a leading national administrator of tax advantaged consumer based reimbursement plans such as health and dependent care spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs) and qualified transportation expenses (QTEs). Additionally, Flores handles COBRA administration and billing services for employers. Based in Charlotte, NC, Flores has emerged as the leader in this field through a service model founded upon innovative technology, dedicated professionals, and an uncompromising commitment to superior service.

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