Commuting costs got you down?

Many companies establish the accounts so that they can provide the transit passes or vouchers directly to employees or give them a debit card to use toward eligible fares. Cash reimbursement is allowed as long as the reimbursement is for a mass transit fare that is not readily available for direct distribution to employees.

If you drive in 2008, you can put up to $220 a month into a separate parking account, from which you can pay for parking fees at train and bus stations or even for spots at or near your office.

For 2009, the transportation benefit total for the two accounts increases to $350. The monthly maximum for a transit account next year is $120. The parking account limit goes to $230.

You can open both a transit and a parking account. Employees who drive to a train station and then take the rail to their office could benefit from both accounts. The maximum contributions for both are indexed for inflation, with the IRS announcing the adjustments each fall.

Account limits, advantages

The funds, however, cannot be commingled. The accounts and the contributions to them must be kept separate.

Neither can you transfer money between accounts or use excess money in one to pay costs that are attributable to the other.

But the accounts do have one advantage over other similar workplace spending plans. At the end of the benefit year, any money still in a transportation account, either parking or mass transit, can be rolled into next year's account.

Also differentiating commuter savings plans from other more commonly-offered workplace benefits is their place in the tax code.

Internal Revenue Code Section 132 deals with transportation benefits, while workplace cafeteria plan benefits (health care, flexible spending accounts, etc.) are governed by Section 125. That's why your employer may offer many typical benefits but not transportation accounts.

If a commuter benefit is offered, it has a separate enrollment procedure. Some companies that handle workplace benefits for employers, however, often help coordinate all the firms' employee benefits.

Gasoline, environmental concerns

The commuter account concept started in 1987 with the creation of Transit Center, a nonprofit that promotes mass transit use via transit benefits. Its founder, president and CEO Larry Filler says that there is growing interest in commuting alternatives.

Because of the cost of gasoline, more workers are looking at mass transit. Environmental issues also are a consideration. "There's a real connection between using transit and reducing greenhouse gasses," says Filler.

The mass transit component, however, works better in some areas than others.

"Transit availability is not uniform across the country," says Filler. "So this typically tends to be of greater appeal to metropolitan areas where employees have numerous alternative transportation options."

The Halo Group, a brand development agency, and Clarendon Insurance Group are prototypical transit benefit companies. Both are in Manhattan.

Denise Goodwin Pace, co-founder and chief communications officer of The Halo Group, says the firm began offering transit benefits three years ago when it moved to the city. "We wanted to keep our employees happy," says Pace. "It pays off for the company in low turnover, and it obviously keeps our workers happy because it helps pay for commuting costs and is a tax benefit for them."