The IRS has just released its annual cost of living adjustments* for 2014. Each year, the IRS is responsible for adjusting the allowances for numerous tax provisions. This adjustment, referred to as a 'cost of living adjustment' (COLA), is based upon the rate of inflation and growth.
The transportation fringe benefit—RideECO—is subject to this annual adjustment. However, because the monthly cap is not permanent, the current 2013 level will expire on December 31. The cap can and will reduce to $130/month at that time. Therefore, unless Congress passes new legislation to maintain the current level, the monthly cap on RideECO benefits will be reduced from $245/month to $130/month effective January 1, 2014.
While this change is not guaranteed, we are alerting clients to this pending reduction and asking them to update their RideECO orders accordingly.
There has been a dedicated effort to maintain the current level: in July, legislation was introduced in both the U.S. Senate and House of Representatives to establish permanent parity between the parking and transit commuter benefits. This legislation was initiated by a bi-partisan group of legislators in the House (H.R. 2288, the "Commuter Parity Act"), and in the Senate (S. 1116, the "Commuter Benefits Equity Act"). If you are interested in more information, you can visit www.CommuterBenefitsWorkforUs.com.
RideECO will be following the topic closely and will alert you to any changes; however, we are notifying all clients to plan for a monthly cap of $130/month beginning on January 1, 2014 and adjust orders accordingly. (Payroll deductions that occur before December 31, 2013 may continue at the current cap of $245/month as long as the annual maximum of $2,940 has not been met.)
We thank you for your ongoing interest and participation in the RideECO program and for your support of this initiative. If you have any questions, please contact us at 215-592-1800.
Thank you,
RideECO Commuter Benefit Program
www.RideECO.org | www.RideECOSelect.com
The information contained within this announcement is not meant as tax or legal advice. Please consult a licensed professional with specific questions.
*Revenue Procedure 2013-35; http://www.irs.gov/uac/Newsroom/In-2014,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments