COVID–19 Commuter Benefits Distribution Act (S. 4928)

COVID-19 Commuter Benefits Distribution Act

This bill allows a one-time withdrawal of certain unused amounts in an employee transportation fringe benefit account. (Conditions apply.)

As background, an employer may provide qualified transportation fringe benefits (e.g., transit passes and parking) to employees through a compensation reduction agreement, under which the employee designates a portion of their compensation for such benefits. Under current law, the amount designated under such an agreement (1) is excluded from the employee’s gross income (for federal tax purposes), up to a maximum monthly amount; and (2) may be used only for qualified transportation expenses.

Under the bill, an employee may withdraw unused amounts from a qualified transportation fringe benefit account, established through a compensation reduction agreement, without any conditions being placed on the use of such amounts. Only one withdrawal is allowed. Further, the withdrawal 

• must occur within a specified period of time;
• may not exceed the highest balance in the employee’s transportation fringe benefit account during the period beginning on March 13, 2020, and ending on December 31, 2023; and
• must be included in the employee’s gross income.