A new bill that would allow workers to contribute to other employee benefit plans was recently introduced in the U.S. House of Representatives.
U.S. Representatives Greg Steube (R-FL) and Suzan Delbene (D-WA) on Wednesday introduced the Optimizing Participant Tax Incentives through Optional Noncash Selections (OPTIONS) Act, aimed at amending Internal Revenue Service (IRS) rules that govern employer contributions to employee benefit plans.
“American workers deserve more freedom and true financial security when it comes to their benefits,” said Rep. Steube in a statement. “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.”
The IRS issued Private Letting Rule 20243400 in May 2024, allowing a single employer to incorporate a flexible benefits program that would allow employes to contribute to retirement accounts, health savings accounts (HSAs), health reimbursement accounts, and educational assistance programs.
The ruling was only intended for a single employer, therefore created confusion among other companies wanting to incorporate it to their plans. The OPTIONs Act would resolve this by codifying the rule and expanding it to all employers.
The American Retirement Association (ARA) praised the bill for expanding contributions to personal finance matters, including healthcare and student loan debt.
“American workers don’t all face the same financial challenges, so their benefits shouldn’t be one-size-fits-all,” said 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.”
The bill has since been referred to the House Ways and Means Committee.