OPTIONS Act

Bill Number: H.R. 8314
Origin Chamber: House
Congress: 119th Congress, Session 2
Status: Introduced
Latest Action: 2026-04-15: Referred to the House Committee on Ways and Means.
Last Updated: 2026-04-21T05:53:25Z

AI-Generated Summary

H.R. 8314: Optimizing Participant Tax Incentives through Optional Noncash Selections Act (OPTIONS Act)

Purpose

The bill aims to let employers offer employees (including retirees) a choice among certain tax-favored benefits funded by employer contributions, without those choices counting as taxable income to the employee.

Key Provisions

New Section 125A (Qualified Benefit Options Plans or QBOPs): Creates a written employer plan where employees can allocate employer contributions among "qualified benefits," but cannot choose cash or other taxable options.
Qualified benefits include:
Retirement plan contributions excluded from income under sections 402 or 403 (e.g., 401(k) or similar plans).
Employer contributions to health reimbursement arrangements or health savings accounts excluded under sections 105 or 106.
Educational assistance payments excluded under section 127.
Other benefits excluded from income under the tax code.
Nondiscrimination rules: Applies rules from section 125 (cafeteria plans) to prevent favoring highly paid employees or key executives; treats available contributions as if made directly to retirement plans for fairness testing.
Reporting: Updates section 6039D to require employers to report details on each qualified benefit's tax exclusion basis.
Effective date: Applies to tax years starting after December 31, 2025.

Significant Changes to Existing Law

Adds a new section (125A) right after section 125 of the Internal Revenue Code, which covers cafeteria plans (plans allowing choice among benefits).
Unlike cafeteria plans, QBOPs prohibit cash elections, enabling broader choices among purely tax-favored benefits without triggering income tax on the allocation.
Expands flexibility for employer contributions across health, retirement, education, and similar benefits, while aligning with existing nondiscrimination and reporting rules.

Potential Impacts

Employers: Greater flexibility to design benefit packages, potentially improving retention and satisfaction without cash payouts.
Employees and retirees: More options to direct employer funds to preferred tax-advantaged areas like retirement savings or health accounts, increasing tax-free benefits.
Government agencies (IRS): Increased administrative oversight for reporting and compliance; possible minor reduction in tax revenue as more compensation shifts to nontaxable benefits.
No direct international relations impact.

Main Stakeholders

Employers: Can offer innovative benefit plans.
Employees and former employees (including retirees): Gain choice in tax-favored benefits.
IRS and Treasury Department: Handle enforcement, reporting, and nondiscrimination reviews.
Plan providers: Retirement funds, health insurers, and educational programs benefiting from increased contributions.

Notable Legal, Constitutional, or Political Implications

Legal: Strengthens tax incentives for employee benefits while maintaining antidiscrimination protections (nondiscrimination rules ensure plans don't unfairly benefit executives). No changes to overall tax base but refines exclusions.
Constitutional: None apparent; fits within Congress's tax authority.
Political: Bipartisan sponsorship (Reps. Steube and DelBene); promotes voluntary savings without mandates, potentially appealing across ideologies.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Steube, W. Gregory [R-FL-17]

Cosponsors (1)

Rep. DelBene, Suzan K. [D-WA-1]

Recent Actions

2026-04-15: Referred to the House Committee on Ways and Means.
2026-04-15: Introduced in House
2026-04-15: Introduced in House

Bill Versions

Optimizing Participant Tax Incentives through Optional Noncash Selections Act — issued 2026-04-15 — PDF (4 pages)