401 K

By: Jerry Geisel (Business Insurance) November 2013

Without congressional action, employees will see a steep reduction in the maximum pretax contribution they can make next year to pay for mass transit commuting expenses.

The Internal Revenue Service disclosed last week that employees can make monthly pretax contribution of up to $130 to pay for mass transit expenses in 2014.

That is nearly half of this year’s $245 monthly contribution limit. This year’s greater limit was the result of legislation Congress passed at the beginning of the year that tied the mass transit contribution limit to the pretax contribution limit for commuter parking expenses, which is $245.

However, the law that temporarily tied the mass transit and parking contribution limits expires at the end of this year. Prior to the law, the monthly pretax contribution limit for mass transit expenses was $125.

Legislation, S. 1116, introduced this year by Sen. Charles Schumer, D-N.Y., would permanently equalize the maximum pretax contribution for parking expenses, which the IRS said will be $250 a month in 2014, and mass transit expenses.

So far, though, the measure has picked up just seven co-sponsors, and no action has been taken on the proposal.