Do Commuter Benefits Rollover From Year to Year?

Commuter benefits are an employer-provided program that allows an employee to set aside pre-tax money for their daily commute. Funds are deducted from a paycheck before taxes are calculated, which lowers taxable income. These benefits are designated for expenses such as public transit, commuter highway vehicles, and qualified parking.

Understanding Rollover Rules

Funds contributed to a commuter benefit plan roll over from month to month and from one year to the next. Any unused balance at the end of a month is automatically available for use in the following month. This is a standard feature under Internal Revenue Code Section 132 and differs from many health Flexible Spending Accounts (FSAs), which often have a “use-it-or-lose-it” rule.

No action is required from the employee to initiate the rollover, as the process is managed by the plan administrator. As long as an individual remains an active employee with the company, the balance will continue to accumulate and be available for qualified expenses.

Contribution and Account Balance Limits

The Internal Revenue Service (IRS) sets monthly limits on pre-tax contributions to commuter benefit accounts. For 2025, the limit for qualified parking is $325, and a separate limit of $325 applies to combined transit pass and commuter vehicle expenses. These figures are an increase from the $315 limits in 2024, and employers may offer a lower limit.

While contributions are capped monthly, the rollover feature allows the total account balance to grow beyond these limits. For example, an employee can accumulate funds over several months to pay for a larger expense, such as an annual parking pass.

Impact of Employment Termination

Because commuter benefit accounts are owned by the employer, funds are forfeited upon termination of employment. This rule applies whether an employee resigns, is laid off, or is terminated for cause. The money does not follow the employee to their next job and is not paid out as cash.

Some employers may offer a grace period, often between 30 and 90 days, allowing the former employee to spend down their remaining funds on eligible expenses. This is not a federal requirement but is a matter of employer policy and must be outlined in the plan’s official documents.

To understand their plan’s specific rules, employees should review the Summary Plan Description (SPD). This document details policies on fund forfeiture and any potential grace periods. Contacting the human resources department or plan administrator before the final day of employment is advisable to clarify these terms.