To amend the Internal Revenue Code of 1986 to allow the carryover of unused nontaxable benefits under cafeteria plans and flexible spending arrangements, and for other purposes.

Amends the Internal Revenue Code to permit: (1) annual carryover of up to $500 of unused nontaxable cafeteria plan and flexible spending arrangement benefits; or (2) such carryover to be distributed as taxable income, or rolled over tax free to certain retirement plans, an education individual retirement plan, or a medical savings account.