OPTIONS Act

Summary#

This bill creates a new Internal Revenue Code section, 125A, called a "qualified benefit options plan." Under such a plan, an employer may let employees choose how the employer's noncash contributions are allocated among certain tax-favored benefits. The plan must be written and may be offered to current, former, and retired employees. Participants may allocate employer contributions among qualified benefits but may not elect to receive cash or any other taxable benefit instead.

The bill lists examples of "qualified benefits": employer retirement contributions excluded under sections 402 or 403, contributions to a health reimbursement arrangement or health savings account excluded under sections 105 or 106, qualified educational assistance excluded under section 127, and other benefits excluded from gross income under the tax code. The bill says rules like those that apply to cafeteria plans (section 125) will apply for limits involving highly compensated employees and key employees. For nondiscrimination testing, if a 401(a) plan is included as a qualified benefit, the employer contribution made available through the options plan is treated as an employer contribution to that 401(a) plan whether or not the participant actually allocates amounts to it.

The bill also updates reporting and recordkeeping rules in section 6039D to cover qualified benefit options plans. The changes apply to taxable years beginning after December 31, 2025. The bill was introduced on April 15, 2026, by Representatives W. Steube and Suzan DelBene and was referred to the House Ways and Means Committee.

What it means for you#

• If you are an employee: Your employer could offer a written plan that lets you choose how the employer's noncash contributions are used among tax-favored benefits (for example, retirement accounts, HRAs, HSAs, or educational assistance). You could not choose to receive those amounts as cash or other taxable pay under such a plan.
• If you are an employer or plan administrator: You may be able to offer these optional benefit-selection plans, but you must follow nondiscrimination rules for highly compensated and key employees and follow the updated reporting and recordkeeping rules.
• If you are a former or retired employee: The bill allows plans to be offered to former and retired employees as well, if the employer includes them.

Expenses#

No publicly available information on estimated budgetary costs or savings. The bill does add or change reporting and recordkeeping requirements by amending section 6039D, but it does not provide cost estimates in the bill text.

Proponents' View#

No publicly available information on proponents' statements or analyses in the bill text or metadata provided.

Opponents' View#

No publicly available information on opponents' statements or analyses in the bill text or metadata provided.