Commuter benefits do not expire while you remain employed, but they do expire the moment you leave a job: any unused balance is forfeited to your employer and cannot be cashed out, transferred to a new employer’s plan, or continued through COBRA.1eCFR. 26 CFR 1.132-9 – Qualified Transportation Fringes The forfeiture applies whether you resigned, were laid off, or were fired.
What Happens to Your Balance When You Separate
Federal regulations prohibit your employer’s plan from refunding any portion of your unused contributions, even if those contributions exceeded the benefits you actually received.1eCFR. 26 CFR 1.132-9 – Qualified Transportation Fringes You cannot receive the money back as cash or as taxable wages, and there is no mechanism to move the balance to a new employer’s commuter benefit plan. Once you stop participating, your access to the account ends.
If you are later rehired by the same employer, previously forfeited funds are not restored. You start fresh.
Commuter benefits are also not covered by COBRA. COBRA continuation applies only to group health plans, so paying premiums to keep your commuter account active after leaving is not an option.2U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
Forfeited funds revert to the employer. Your employer may keep the money, use it to cover plan administrative costs, or redistribute it to other plan participants. None of it comes back to you.
Run-Out Periods for Claims After Your Last Day
Even after your last day of employment, you may still be able to submit reimbursement claims for transportation expenses you paid out of pocket while you were actively employed. This window, known as a run-out period, gives you time to gather receipts and file claims for expenses that occurred before your separation date. You cannot use the run-out period to make new purchases or to pay for commuting costs incurred after your final day.
The length of the run-out period is set by your employer’s plan document, not by federal law. Common windows range from 30 to 90 days after your separation date or after the end of the plan year. Your Summary Plan Description spells out the exact deadline. Missing that deadline results in an automatic denial, and these cutoffs are rarely extended.
Commuter benefit debit cards are typically deactivated when your employment ends, even if the run-out period is still open. During that window, you would need to submit manual reimbursement requests with supporting receipts. Keep documentation that shows the date of the expense, the dollar amount, and the name of the provider, such as a parking garage or transit authority. Note the cutoff date as soon as you learn when you’ll be leaving.
How to Spend Down Before You Leave
If you know your departure date in advance, use your balance before your last day. Buy transit passes, prepay for parking, or stock up on eligible commuting expenses while you still have access. You can adjust your monthly contribution amount, so reducing your election to zero in the months leading up to your departure prevents new funds from accumulating on top of what you already have. A few weeks of planning can prevent hundreds of dollars in forfeited funds.
Watch the interaction between your account balance and any transit smart card or voucher your employer loads. The underlying balance rolls over month to month, but the card itself may have its own monthly spending window that resets, so funds sitting on the card can behave differently from funds sitting in the account. Check your specific transit card terms separately from your benefit plan documents.
Switching Between Transit and Parking
If your employer’s plan allows it, you may be able to apply unused transit funds toward qualified parking expenses, or the reverse. IRS guidance has permitted this cross-application as long as the total used in any month does not exceed the applicable monthly limit for that category. That flexibility can help when you are trying to draw a balance down quickly. Confirm with your plan administrator whether your specific plan permits cross-category spending.
What About an Unpaid Leave of Absence
Going on unpaid leave is not the same as leaving your job, but the treatment can feel similar. If you take an unpaid leave, including FMLA leave, your employer is generally not required to maintain your commuter benefits during that time. FMLA mandates continuation of group health plan coverage, but commuter benefits fall outside that protection. Whether your account stays active depends entirely on your employer’s plan terms.
Most plans allow you to revoke your commuter benefit election when you go on unpaid leave, since there are no wages from which to deduct contributions. Your existing balance typically remains in the account during the leave, though you may not be able to spend it if the plan suspends your participation. When you return, you should be able to re-enroll and regain access to any remaining balance, but reinstatement rules vary by plan. Review the plan’s rules before an extended leave begins, and consider spending down or reducing your contribution to zero so funds are not sitting inaccessible for months.
Why the Balance Rolls Over Until You Leave
Unlike health flexible spending accounts, which often require you to spend down your balance by year-end, commuter benefit accounts have no annual expiration. Federal regulations explicitly allow you to carry over unused contributions to future months, including months in the following calendar year.1eCFR. 26 CFR 1.132-9 – Qualified Transportation Fringes Your balance continues to accumulate as long as you participate in your employer’s plan, and there is no cap on how much can build up over time, though monthly spending limits still apply. That is why a balance can grow large enough to matter when you leave, and why timing your spend-down before separation is the only way to keep the money working for you.