Qualified transportation fringe benefit plans allow employers to provide employees with qualified parking, transit passes, and vanpooling on a tax-free basis. The amounts of monthly transportation fringe benefits that employees can exclude from income are subject to annual limits, which are indexed for inflation. These benefits cannot be offered through a Code § 125 cafeteria plan, but to the extent that a transportation fringe benefit plan is employee funded, the employer can set up a pre-tax compensation reduction plan. Amounts contributed by an employee through such an arrangement are excluded from income for purposes of FICA and federal income taxes. Current employees can carry over unused amounts, so long as the amounts are used for transportation fringe benefits.