Steube, Delbene Introduce the OPTIONS Act

WASHINGTON - U.S. Representatives Greg Steube (R-Fla.) and Suzan Delbene (D-Wash.) introduced today the Optimizing Participant Tax Incentives through Optional Noncash Selections or OPTIONS Act. This bill would clarify existing gaps in the Internal Revenue Service's (IRS) rules governing employer contributions to employee benefit plans.

"American workers deserve more freedom and true financial security when it comes to their benefits," said Rep. Steube. "Unfortunately, ongoing confusion and inconsistencies with IRS rules governing employer contributions to benefit plans have shortchanged millions of Americans of potential savings. That is why I am introducing the OPTIONS Act to ensure workers have more choices and better benefits at the workplace."

"Workers want more flexibility in their financial planning, but employer contributions are mostly limited to retirement accounts currently. With many employees wanting to prioritize student loans and health care bills, this legislation would let them direct their employer contributions to these needs. This commonsense bipartisan bill would give workers more options while ensuring those focused on retirement can continue to save," said Rep. DelBene.

"American workers don't all face the same financial challenges, so their benefits shouldn't be one-size-fits-all," said American Retirement Association (ARA) CEO Brian Graff. "The OPTIONS Act is a smart, forward-looking solution that empowers employees to direct employer contributions where they need them most, whether that's retirement savings, healthcare, or paying down student debt. ARA applauds Representatives Steube and DelBene for their bipartisan leadership on this important legislation, which strengthens financial security while preserving the integrity of our employer-sponsored system."

Background: In May of 2024, the IRS issued Private Letter Ruling (PLR) 20243400. This permitted a single employer to implement a flexible benefits program allocating contributions to employee retirement accounts, Health Savings Accounts, Health Reimbursement Accounts, and educational assistance programs. While this ruling was a positive step, the fact it granted unique permission for one specific employer has created uncertainty for other employers interested in adopting a similar flexible benefit package for their employees. The OPTIONS Act resolves this extending the flexible benefits model in PLR 20243400 to all employers.

Read the full bill text here.