HR 8314
Options act
Options Act
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Bill overview
This bill, the OPTIONS Act, allows employers to offer employees a choice of tax-favored benefits through a ‘qualified benefit options plan.’ Under this plan, employees can allocate employer contributions among different benefits like retirement accounts, health savings accounts, or educational assistance programs, rather than receiving a cash payment. The bill aims to provide more flexibility in employee benefit packages while maintaining tax advantages for these contributions.
Key provisions
- Establishes ‘qualified benefit options plans’ offered by employers.
- Allows employees to choose among different tax-favored employer contributions.
- Defines ‘qualified benefits’ to include various retirement and healthcare accounts, and educational assistance programs.
- Excludes employer contributions allocated to qualified benefits from participant’s gross income.
- Maintains nondiscrimination rules for qualified plans.
- Requires reporting and recordkeeping related to qualified benefit options plans.
- Specifies an effective date of December 31, 2025.
Who is affected
- Employers
- Employees
- Former Employees
- Retirees
Notable changes
- Creates a new framework for employer-provided benefits, offering employees more choice.
- Expands the definition of ‘qualified benefits’ to include a broader range of tax-advantaged accounts.
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsor
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119th CONGRESS — 2d Session
H. R. 8314
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to establish that employers may offer employees a choice among tax-favored employer contributions.
This Act may be cited as the Optimizing Participant Tax Incentives through Optional Noncash Selections Act OPTIONS Act
or the
.
Except as provided in subsection (c), no amount shall be included in the gross income of a participant in a qualified benefit options plan solely because, under the plan, the participant may choose among the benefits of the plan.
For purposes of this section—
may not elect to receive cash or any other taxable benefit instead of qualified benefits.
The term qualified benefits includes—
non-elective employer contributions which are excluded from gross income under section 402 or 403,
contributions to a health reimbursement arrangement or health savings account which are excluded from gross income under section 105 or 106,
amounts paid by an employer pursuant to a qualified educational assistance program which are excluded from gross income under section 127, and
other benefits which are excluded from gross income under any other provision of this chapter.
Rules similar to the rules of subsections (b), (c), (e), and (g) of section 125 shall apply for purposes of this section.
For reporting and recordkeeping requirements, see section 6039D.
Subsection (d) of section 6039D of the Internal Revenue Code of 1986 is amended—
by inserting , 125A
after 125
in paragraph (1), and
by adding at the end of paragraph (2) the following: In the case of a qualified benefit options plan under section 125A, such term means, with respect to such plan, the section under which each qualified benefit (as defined in section 125A(b)(2)) included in the plan is excludable from gross income.
.
The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 125 the following new item:
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.